Though Microsoft's 'Argo' (now known to be bearing the name 'Zune') is most assuredly a shot at the iPod, it may not be going after the handheld gaming market
. Gamespot explores rumours stating that the 'Zune' is simply a first step on Microsoft's road into that particular sector of the games industry. From the article: "The Zune could also just be the first step towards something bigger. People are already speculating about Xbox 360 integration with the device, beginning with streaming audio, like the iPod currently does. But add a few buttons, a thumbstick, and a little more horsepower, and the Zune could soon be singing gamers' tunes."
I'd imagine we'll see some simple Xbox Live Arcade style games, which will impact your Xbox gamertag via Live Anywhere. With Vista pushed out to January, they've got to have something
to show this Christmas.