BusinessWeek is reporting that Microsoft has assembled a team to look into developing a portable media device to compete with the likes of Apple's iPod & Sony's PSP. I personally don't see MS going into a market already flooded with such devices, but you never know; especially if they make it a gaming system first, and a multimedia platform second.

"So in addition to playing music and videos, a Microsoft device would include games. Microsoft would probably use the Xbox brand to market the gadget."