With the launch of the 3DS and the new PS Vita, I've been wondering if Microsoft might think about getting in the ring. What do you guys think?

They have. It's called Windows Phone 7. That's one of the selling points, to be able to earn achievements and rack up your Gamerscore.

I dunno about a real handheld though. Seems they think it's "below" them or something.

Microsoft doesn't see's a future in handhelds, they have stated this multiple times. they do see a future in mobiles. And thats why they got indeed a windows phone 7 or whatever its called.

There were rumors in the past but they were just that, I highly doubt with NINTENDO and SONY dominating the true handheld console market and APPLE having there piece of the pie that there is room for another.

No, they created it because their last smartphone operating system was horrible when compared to others such as Blackberry, iOS, and Android and they were losing sales.

So they started over with their whole operating system.

Although they do believe that it can act as a handheld console as well.

Fixed

they could make a new console but to be frank i am not sure they have enough dev power to make the games to sell it

they are streched thin as it is, as kinect launch followup shows

i have never seen a system as hollow as kinect sell so well i can see it falling off sharply or just flatlining come holiday

Interestingly Hideo Kojima said that the transfarring uses between the PS3 and PSP in the Metal Gear Solid HD Collection could work for the Xbox 360 if Microsoft made a handheld. I doubt it would happen but it would be cool to be able to play Halo, Gears of War and Forza wherever you go with graphics as good as the Xbox 360, dual analog sticks and 3G with full Xbox Live integration.

I think the Xbox 360 was one of the most successful endeavors Microsoft has done in a while. I love the idea of competition. This last round of console wars really pushed each company to their limits. And, I'd love to see that same kind of competition in the handheld marketplace. It's a shame if Microsoft is only going to focus on smart phones and ignore their core gamer Xbox fan base.