Though Microsoft is still open to entering the handheld gaming market, the company has currently committed its resources to living-room initiatives like the motion-sensing Project Natal camera, according to Microsoft corporate VP Shane Kim.

"For us, it's a matter of focusing on 'when'" said Kim of entering the portable market during an interview with Kikizo.

"If we chased after a mobile or handheld opportunity, we would not have the resources and ability to do things like... Project Natal," he added. "So we've chosen to focus on the living room experience from a hardware standpoint, if you will, but we're building a service in Live that will... will extend to other platforms. No question about it."

When asked whether he thinks the Xbox brand could succeed in the portable market, Kim answered in the affirmative.

"So the question will be, how do we enter into that market--do we do our own device, do we create our own phone--that's a question for the company itself," he said. "Do we continue to go down the Windows Mobile path which is that path that we're on today, etcetera, etcetera."