New Xbox Handheld info has just run a story, stating that Takahashi of The Mercury News has confirmed the existance of a xbox Handheld Project. J Allard is said to be leading the team, with the designer of the Xbox 360 on board as chief handheld designer.

The handheld will be simillar in functionality to the PSP, offering music, video as well as gaming. It is due to hit shores in 2007. Heavy media centre/Windows Vista compatiblity is also bound to be found.

Source: Joystiq