Analysts from The Diffusion Group are predicting that Microsoft will enter the portable gaming market by the end of 2007, with a portable Xbox game system/media player. The portable market is expected to reach $3 Billion annually by 2008, with only Nintendo and Sony playing along. They think that would seem unrealistic if Microsoft didn’t try and get a cut from that pie. But would it make sense for Microsoft to do that? The Xbox and Xbox360 have lost Billions, and to try and fight Nintendo (and Sony for that matter) in the handheld market could cost them Billions as well. The DS outsells the Xbox360 almost everywhere now, even the PS2, PSP, GameCube and GameBoy Micro outsold Xbox360 in Japan the recent months.