Microsoft's GDC keynote address revealed the news we've been expecting for well over a year – ever since the conception of the company's portable music player Zune.

Microsoft will indeed be entering the handheld gaming market with Zune. The device is set to play games made using Microsoft's XNA Game Studio development tools.

Currently used by developers for Xbox 360 and Games for Windows platforms, the toolset will now encompass Zune into its gaming family. XNA general manager Chris Satchell spoke at the keynote of easy portability of code between the three, saying games could be developed on PC using XNA Game Studio, then loaded onto the others.

The news follows fast behind Apple's latest venture into handheld gaming with its fifth generation iPod. Whether Microsoft will utilise a similar distribution method for its games to Apple's iTune Store through the Zune Marketplace has not yet been decided, but Zune games will have the added benefit of wireless multiplayer thanks to the unit's wi-fi functionality.

Further information posted by engadget states the first beta development tools will be available this spring; and also that there are no plans for Zune game sharing (yet). So to play wirelessly with a friend, both of you will need a copy of a game.

It also says Microsoft hints it will be up to game developers to decide whether to make their game's controls compatible with first-generation Zunes, as well as the second-gen touchscreen models.

Related news to come out of the Microsoft keynote regards new plans for community-made games on the Xbox Live Marketplace which will allow XNA game developers to upload games for the community to play and review. The most popular of which – it seems likely – could then be made available for Zune.

It's big news from Microsoft but, of course, since Zune remains available exclusively in Microsoft's US homeland with no commitment from the company for a worldwide release of the device, it's also an announcement we'll benefit little from in the short-term.

Whether this tentative move into handheld gaming will result in Zune enjoying larger success in its domestic market remains to be seen, but it's a considerable challenge when Apple still dominates so massively when it comes hard drive player sales. Only if it can is it likely Microsoft will launch its handheld worldwide.

Naturally, that doesn't stop us from bringing you coverage of the first Zune games as they appear. In fact, you can read our first hands-on impressions of Zune right here.