No, this is about hardware, and its about something that existing solutions aren't suited for (and, by extension, a unique enough use that current ARM license holders aren't keen on addressing). The most likely candidate is Zune or a more-traditional portable gaming device to compete with the PSP replacement and upcoming 3DS from Nintendo. Next up would be some other skunk-works device — something like Courier, maybe, but even that would be quite well served by OTS solutions, or by any of the custom chip integrators.

Some less-likely candidates would be an ISA extension to make x86 emulation more efficient, and/or Jazelle-like instructions to execute managed code more efficiently. Least likely of all, but still a possibility, would be that it has something to do with the next Xbox — ARM isn't known for being a high-powered architecture, but tossing 16-32 ARM cores on a die and hitting 2Ghz in current thermal/power constraints wouldn't be terribly difficult. An ARM core might serve as the ISA for an SPE-like DSP core (a'la Cell), or opposite, might serve as traffic director/general integer compute core for many bespoke SPE-alikes (essentially serving the same role as the PPC core in the Cell, which, on its own is only about as powerful as an Intel Atom CPU, so an ARM core could certainly serve that role).

WHAT are you talking about ….?
ARM doesn't emulate anything – it has it's own instruction set (not related to X86). Why are you talking about emulation?
ARM is NOT Transmeta which did emulate X86 in RISC.
I think you need to check out what the ARM architecture is all about – its certainly not about trying to emulate X86 or anything else for that matter!

I forgot to use the “sarcasm” tag in my post. On the other hand, Microsoft was never shy to kill any good idea that it could grab.

Marvell showed the tiny, beautiful fan-less e-box off in January, with Full Ubuntu-arm kernel support for all those lovely on-chip interfaces, the DSP for video decode and the graphics core, and that was 4 months after the chip started sampling. We are now nearly a year on, and still these Microsoft-eaters are nowhere to be seen.

At the price points talked about ($100-$150 dollars) these machines would really shift, but no manufacturer seems to want to produce the designs.

We want to buy them. Where ARE THEY!!!!

That's an awesome speculation.

Yup it would make sense for Microsoft to realize x86 emulation on ARM and maybe in a way utilize their Azure cloud computing system, deliver apps on demand, through the cloud, using some kinds of x86 app remote virtualization.

This way, amazingly, Microsoft may not even require people run Windows as the OS, they would sell you powerful apps and online tools on demand. They would then support x86 virtualization and emulation on Linux even and eventually go for the whole web apps and cloud computing thing.

In my opinion, Windows on ARM is not interesting if it isn't backwards compatible with the ten thousands of existing Windows-applications.
Therefore, what I thought was the most plausible scenario, is Microsoft is developing a way to run legacy x86 applications on ARM. To make a good x86-emulator, they need access to low-level details of the ARM instruction set.

Also, they were working on the Courier tablet, but it seems they were dependent on nVidia's Tegra2 for it. However, there have been doubts about nVidia, and it might be they don't want to be dependent on 3d parties (such as Intel, TI, Freescale etc.)
See: http://www.semiaccurate.com/2010/04/14/samsung-…