It seems plausible enough. The XBox has been a huge success, taking market share away from rival Sony's Playstation and gathering a huge following. Gamers nowdays are really left in one of two camps: Xbox or Playstation. Rarely both. With that as the history, it's no surprise Microsoft would want a piece of that other gaming pie: mobile games. While Nintendo has been the undisputed monopolistic leader in that space for years (the last decade, really), things changed last year when Sony introduced the Sony Playstation Portable (PSP). So, does it surprise anyone that Microsoft might want a piece of that action too? It shouldn't. They've got the resources, and the Xbox technology to springboard off of. Plus, the technology is so strong these days that there are small enough processors to make your handheld almost as strong as your desktop machine -- certainly as fast as a full fledged gaming device like a Playstation. And finally, Microsoft's got deep enough pockets to weather any financial shortfalls while it's machine builds a following; that's exactly what they've done with the Xbox.
All in all, I'd say it's perfectly plausible this thing might happen. We'll have to wait and see for sure.