The Verge has spoken to "multiple sources familiar" with the project and has confirmed that Microsoft is making an Xbox branded Surface tablet engineered for mobile gaming.
Such a tablet was suspected in June after a document detailing the project was uncovered. Pundits claim the 7 inch tablet will include an ARM-based Texas Instruments processor with 288MB of RLDRAM 2 and a 1280 x 720 resolution screen.
It's also believed the tablet is being developed independent of hardware architecture, accommodating the possibility the specs could be altered to suit an unannounced chipset from Intel.
As for the software, the Xbox Surface tablet will run a custom Windows kernel, with messaging and other functionalities possible.
The tablet is believed to be in testing following the recent lock down of Xbox-related buildings in Silicon Valley. The lockdown has resulted in restricted employee access to the company's Interactive Entertainment Business division.