This is according to an industry insider quoted by Softpedia, who said that Microsoft is in the process of developing a brand new portable device which is being designed by members of a team that is usually dedicated to augmented and virtual reality solutions.
It is expected that the device will boast flagship specifications, which make sense if it is going to be powering in-depth interactive experiences. It also seems that this will be separate from the long awaited Surface-brand phone, which is still something that Microsoft has not managed to bring to market in spite of persistent rumours.
At one point, it looked like Windows Phone might become the next big contender to Android’s crown, but even with its takeover of Nokia it has not been possible for Microsoft to gain a significant foothold in the mobile market. A new device could change this, but only if it is exceptional.