We can definitely see the appeal from Microsoft's point of view -- the move could provide the company with a quick, back-door entrance into the highly competitive portable gaming market while at the same time keeping up with Apple's game-playing iPod. The online functionality of Xbox Live and the library of casual and classic games from Live Arcade could also provide for good software support.
Still, we're not convinced games will attract many new customers to the weak-selling Zune. Given the system's design as a music player, we doubt the system has the hardware power or game-centric interface needed to really compete with the firmly entrenched DS and PSP. Still, you can never have too many devices that play Bejeweled in your pocket.
Sony PlayStation Portable PSP-2000
Microsoft Xbox 360
Microsoft Zune HD