News.blog: Handheld Xbox rumours heating up

While the Origami hype is finally dying down, the rumours of a Microsoft portable gaming device are heating back up.

A story in Monday's San Jose Mercury News suggests that the combination music and gaming device is moving from possibility into project, though it still could be years off.

The Merc reports that some of the top names from the Xbox unit are working on the product, including J. Allard and Xbox 360 designer Greg Gibson, along with division finance chief Bryan Lee.

BusinessWeek reported back in January that Microsoft was considering such a product, but had yet to give it the go-ahead.

Microsoft offered a statement, but added little detail on its plans.

"The posting from today's San Jose Mercury News is highly speculative, and we will not comment on it specifically," Microsoft said. "Microsoft is committed to innovate and invest in technologies, products and services that enhance the digital lifestyles of our customers, and our recent reorganisations... sought to bring more focus to Microsoft's efforts in entertainment, including music."