This isn’t the first we are hearing about this Microsoft Concept Device called the xBox 360 Zune aka Zune 3G.

We just got word from rumourtopia that Microsoft Developers are working on a Digital Entertainment Handheld which is the Xbox and the Zune combined to make one awesome portable device. According to Team Xbox the project is codenamed “xYz” which is assumed that the “X” stands for Xbox, the “Y” meaning “Yes they Can” and “Z” from Zune or they could just be tired of saying Project ABC and use XYZ this time around to make it a bit unique.

So far we understand that if the xyz does really is a prototype getting ready for the world, it will have a touchscreen interface. I saw this at coolest gadgets and I am helping to create the buzz so hopefully if it is really a rumour, this will let them be aware that we really really want to so called Xbox Zune 360.