The fellows at Team XBox have released an article claiming that Microsoft is working on a new handheld device that will contain features of the Zune portable music player, as well as be some sort of XBox video game device. They claim that many anonymous sources have spoken with them about the upcoming device, with one person using the term ‘xYz’ refering to the device being a meld of the XBox and Zune devices. The new device could also be used as a phone, which would place it as a direct competitor to the iPhone and iPod touch devices. If this device does come out with superior gaming and other capabilities, it could actually give Apple a run for it’s money. And even if this exact product never sees the light of day, NVidia and Microsoft have officially announced that they are working on a partnership to bring NVidia’s line of new graphics chips for mobile platforms to Windows Mobile devices before any other smart phone platform. I think its safe to say that Microsoft is definitely cooking up something to go up against Apple’s iPhone and iPod touch.