Microsoft Handheld Gaming in 2007?

1up is reporting on speculation from analysts 'The Diffusion Group', who have forecast a handheld gaming device from Microsoft sometime in the next two years. From the article: "It's an analyst group's speculation and should be taken as such, but simultaneously one has to wonder what is the likelihood of Microsoft bringing a PGC to its platform library. A portable entry seemed like the next logical step for Microsoft before E3 -- and that logic was confirmed by the announcement of Live Anywhere at E3 -- a handheld platform would certainly make a solid launching pad for the mobile arm of Live Anywhere, wouldn't it?"