Depending on your view of things, this will either be great news or bad news--but evidently Microsoft is 100% committed in driving Windows Phone as their gaming platform, meaning we won't be seeing a "portable Xbox" system anytime soon.
According to Dennis Durkin, Microsoft’s chief operating and financial officer of the company’s Interactive Entertainment Business, who spoke with Pocket-lint recently at E3, Microsoft just does not see stand-alone portable consoles as a viable option these days:
"In a term of a dedicated handheld there are questions of the viability of that business model..."
"People have been asking for a long time about handhelds. It’s a really interesting time in that market. Look at the Nintendo 3DS, it’s been a slower start than analysts and others had expected, but it’s a super-competitive space. Any dedicated portable device like a camera, or a portable gaming device like the 3DS has a tough time."
Going further, Marc Whitten, corporate vice president of Xbox LIVE noted that at least on Windows Phone:
“Today on Windows Phone, Xbox Live games make up less than 1 per cent of the number of games that are on there. They are over 30 per cent of the units of the games downloaded on the phone, and they over 70 per cent of the revenue. That’s because consumers value the experience and integration of the game with Xbox Live.”
We certainly see why revenue is higher, as they charge more, a lot more in fact, than 3rd party developers. Evidently though, people are buying them, despite some issue in pricing and those broken achievements in a handful of games.
For us Windows Phone users, in our opinion this is good news as it means Microsoft will concentrate only on our platform for game development and not create an even more fragmented system (PC, Xbox, Phone and then portable console). Surely we are years from making current 360 games truly portable, so any handheld system would have to be an in-betweener Phone vs. Xbox 360. Plus, as pointed out earlier, it's all about in convergence is key here: people want one device aka "the phone" to do their games, bills, email, music, etc.
Speaking of convergence, WinRumors spoke with Microsoft about that whole Xbox 360/Kinect/Windows Phone tie in we saw months ago at Mobile World Congress: ETA is sometime "next year" as they're currently developing and testing a few games. All we know is this feature can't come fast enough.