Microsoft's J Allard is currently working on a new project to develop the company's first handheld console, according to Dean Takahashi, the author of a forthcoming book about the launch of the Xbox 360.
In an article for the San Jose Mercury, Takashi claims that "sources familiar with the project" have revealed that the new device will allow users to watch movies and listen to music as well as play games. Unlike the recently announced Origami tablet PC, the handheld's focus will be solely to deliver entertainment.
Takahasi said that Xbox executive J Allard is heading up the project together with Greg Gibson, who was system designer for the Xbox 360. Finance chief Bryan Lee will oversee the business side.
Takahashi also claimed that chip manufacturer Transmeta has already assigned 30 engineers to work on a "secret project" with Microsoft, and that Transmeta has experience of reducing chip power so that they can be used in handheld machines without causing too much of a drain on battery life.
Apparently Microsoft also intends to set up an iTunes-style digital music distribution service, codenamed Alexandria, and is currently considering its options with regard to music technology.
According to Takahashi's sources, the new handheld will not appear on shelves for at least a year, and possibly two, since those working on the project have only been free to devote their time since they finished work on the Xbox 360 in the autumn of last year.
Takashi is known to have high profile contacts within Microsoft - he published a book chronicling the story of the original Xbox in 2002, titled Opening the Xbox, and a similar book about the Xbox 360 is slated for publication later this year.
Microsoft has yet to comment on Takahashi's claims. However, in comments made earlier this year, Xbox boss Peter Moore hinted that the company might consider developing a multimedia handheld - adding that any such device "can't just be our version of the iPod."