Microsoft to Enter Portable Gaming Market?

A new report out from market research firm The Diffusion Group suggests Microsoft may develop a portable gaming device within the next two years.

The Diffusion Group, a market research firm which focuses on the new media and digital home markets, yesterday suggested via new research that Microsoft may look to enter the portable gaming market in late 2007 or early 2008 via its Xbox franchise.

In its report, said the Diffusion Group, they discuss how Microsoft is looking at two options for creating a portable multimedia player to compete with Sony’s PlayStation Portable. One situation envisions the software company licensing a version of its Xbox OS for others to build portable hardware designs upon, or introducing its own branded portable gaming console.

“Microsoft has been waiting on the sidelines until its gaming console and software business reached sustainability, all the while watching closely how Nintendo and consumers in general would respond to Sony’s PSP,” said Thomas Wolf, a portable media analyst and co-author of TDG’s latest report, in a statement. “With global PGC revenues expected to reach $3 billion annually by 2008, and with only Sony and Nintendo active in the PGC space, Microsoft has before it an incredible opportunity. It has a critical brand presence in the console space, the breadth and depth of gaming titles, and the marketing clout necessary to enter this space and win decent market share.”