Report: Microsoft readying PSP, iPod killer

Further confirmation was published today that Microsoft is designing a new product that will combine video games, music and video in one handheld device.

The Mercury News reports: "The Microsoft product would compete with Sony, Nintendo and Apple Computer's products, including the iPod. And Microsoft has some of its most seasoned talent from the division that created its popular Xbox 360 working on it. Game executive J Allard leads the project, and its director is Greg Gibson, who was the system designer on the Xbox 360 video game console. Bryan Lee, the finance chief on the Xbox business, is leading the business side of the project.

By anchoring its entertainment device as a handheld game player, Microsoft is starting from its position of strength in the entertainment business that it hopes Apple cannot match, even with its iPod. The game press has dubbed it an 'iPod killer,' but its functions would likely more closely resemble Sony's PlayStation Portable multimedia gaming device."