Eurogamer, Microsoft Game Studios VP Shane Kim says he's "happy" the company never got into the handheld market, explaining the division has plenty on its plate with the Xbox 360 and Xbox Live. He goes pretty deep into the issue, almost shutting down the idea of the Xboy entirely by expressing Microsoft is happy to let Sony and Nintendo fight it out.
Kim believes mobile is more important for MS and Windows Mobile is a really "compelling opportunity" for the company. He explains that it's a way for the company to get into the arena without having to worry about creating more hardware. Microsoft has certainly learned that making good hardware isn't easy and can be hazardous.