Microsoft thinks that investing in home consoles is a much better idea right now.
Dennis Durkin, the chief operating officer for the Microsoft division that - among other products - handles the Xbox, says that he isn't sure that releasing new dedicated handheld devices is such a good idea at the moment and questions whether Sony and Nintendo have made the right decision in doing so.
Durkin said that the handheld market was not only very full at present, but that there was a lot of change going on in it. He pointed out that sales of the 3DS had been much lower than people had been expecting - something that Nintendo has also acknowledged - and said that there were better places that Microsoft could invest its resources. "You only have a certain number of bets you can make as a company and you have to decide what you want to put your wood behind and I'm just not sure [handheld gaming is] a place that I would put mine."
He said that Microsoft was much more comfortable focusing on the Xbox 360. He said that the 360 was where Microsoft was able to best differentiate itself from its competitors, and that he was excited about the future of the console. "It's been very, very consistent and I think it speaks to the trends that you're seeing in terms of sales and velocity over the last 2 years ... So I feel very good about our relative position relative to both of our competitors. I certainly wouldn't want to trade hands with either of them."
Some of Durkin's comments should obviously be taken with a pinch of salt - he's unlikely to say, "Yeah, Sony really has us on the ropes," any time soon, even if it was true - but he's certainly not wrong about the changes in the handheld market. The proliferation of smart phones and tablet computers since the release of DS and PSP has changed the landscape, with many casual players able to get a gaming fix without shelling out for a dedicated device. Obviously, there's still a market for these devices, but it isn't the same market as existed in 2004/2005 when the DS and PSP launched.
Source: Industry Gamers