Details on the so-called "Xbox Surface" were revealed on Tuesday by The Verge, which cited multiple sources familiar with the company's plans. The 7-inch tablet is expected to run on an ARM processor with high-bandwidth RAM designed specifically for gaming tasks.
The rumored tablet is said to run a custom Windows kernel that may support regular tablet functions. However, the focus of the hardware and software is said to be gaming.
Microsoft has allegedly locked down several Xbox-related development buildings at its corporate campus in Redmond, Wash., in an effort to keep a lid on the secret Xbox Surface project.
Microsoft is currently one of the "big three" hardware makers in the home gaming market with its Xbox 360 console. But the company has not opted to compete in the handheld gaming space, where Nintendo's 3DS and Sony's PlayStation Vita compete with Apple's iPhone, iPad and iPod touch.
Microsoft recently released its first Surface tablet, a 10-inch device designed to compete with Apple's iPad. Like the iPad, the Surface is an all-purpose computing device capable of browsing the Web and editing documents, in addition to playing games. But the primary focus of the rumored Xbox Surface will apparently be games.
Apple has chosen to market its iPod touch as largely a gaming device, even though it can run the same applications as the iPhone. The latest iPod touch is marketed with the slogan "Engineered for maximum funnies," while Apple used the slogan "Game on. And on. And on." in 2010.
Downloadable games also routinely dominate the most popular options on the iOS App Store for both the iPhone and iPad. For example, on Tuesday, seven of the top 10 paid iPhone applications were games, while eight of the top 10 paid iPad apps were games.