Check out the featured photo - it looks like a mockup of what the actual Xbox 360 would look like. A portable console from Microsoft is not improbable, with news filtering through that half of Microsoft's original Xbox 360 development team has started work on a new handheld console. More possible hints were dropped with the merger of the Windows Mobile team with the Xbox group. If you look around, there are different type of prototypes so take everything with a pinch of salt at the moment.
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Now, this is only a mock up, even the source says its a mock up. If this is to happen this would be very cool. The Pic is probs just a out line of what it looks like, I will inform you guys if there are any new pics or news about this.
Heres Another Artical I found:
GDC 06: A Handheld Xbox?
Article claims that MS is working on a portable entertainment device.
by Wade Steel
March 20, 2006 - We haven't heard from Microsoft's J Allard in a while and the reason for his absence in the Xbox 360 post-launch period would seem to be that he has been leading a team that has been working on a portable entertainment device for the company, according to a report from the San Jose Mercury News.
The report, written by Dean Takahashi who is also the author of an upcoming book on the Xbox 360's launch, states that Microsoft's product is designed to combine games, music, and video into one handheld device in order to compete effectively with the current products offered by Apple, Sony, and Nintendo. According to Takahashi's article, J Allard leads the project and Greg Gibson, who was the system designer on the Xbox 360, is the project's director.
Industry insiders who are familiar with the project have stated that the product could potentially be an "iPod killer" though its myriad functions make it more comparable to Sony's PlayStation Portable device than Apple's own powerhouse MP3 player. The article goes on to state that the device may be at least a year or two away before entry into the consumer market.
The report states that the approval for the project was what prompted the wholesale reorganization of Microsoft's Home and Entertainment Division last September in order to combine the Xbox with other mobile and entertainment businesses in one of four major product groups.
While nothing regarding the existence of a handheld entertainment device has been confirmed by Microsoft, the article states that Transmeta, a maker of low-power chip technology, has assigned 30 engineers to work with Microsoft on a "secret project."
While the Mercury News report does contain quite a bit of "unconfirmed" information from "unnamed" sources, there is little doubt that where there is smoke, there is fire and it would only be logical that the expanding handheld market would be one in which Gates & Company need to plant the Microsoft standard. We'll be keeping you informed as developments happen.
Source: IGN 
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