There are alot of rumors as to what Microsoft will be unveiling at E3. The latest rumor is about the ZuneX.

Details are still sketchy as to what the ZuneX is. Whether its a phone, a handheld gaming unit, a new Zune, all of the above, we still are not sure. I have looked at all the information and with it being such a wide range, I really don’t want to speculate at this point.

The one point that everyone seems to agree upon and even I have heard direct information about is it will be linked with Xbox Live. One other tidbit, according to play.tm the unit will support OnLive. Since the article went up, OneLive 1 has linked to the article. They have not denied the information, only posting "Microsoft has neither confirmed nor denied the existence of the ZuneX." I find it interesting that if this information would be false, why would they feed the fire.

Will the ZuneX will compete with the PSP or the DS is still up in the air.  Some have speculated that the unit will have up to 128 MB of RAM and 32 GB of flash memory, with one analog stick.

There is a shot of a spec sheet but it really doesn’t tell much, so I guess we will have to wait till E3, where we will get all the latest gaming news.

Sources: Play.tm, TeamXbox