The project, codenamed "xYz," is said to feature a WVGA touchscreen and a way to play music and movies on both the device as well as the Xbox 360. Basically, it's going to be a connected handheld gaming system with rich multimedia features.
Eh. Also, "xYz" -- what a horrible codename. I can already think of like a million better ones. Including, and pretty much limited to, "Project Zune Liquidation".