Microsoft Handheld Speculation, PS3 a Computer ?!?!

There have been a few reports/comments surfacing recently speculating the possibility of a Microsoft handheld device being released Late 2007 - Early 2008. Most of these speculations are stating that the device will not solely be a gaming device but something that would go after both the PSP and iPod audiences, I imagine something like a PDA with a HDD. Now with the announcement of Live Anywhere at E3, there are some interesting possibilities around a device like this and creating a "community" environment for portable users, something that I feel is defiantly missing from the PSP. I can't imagine Microsoft creating a strictly gaming device, it would probably be a new genre of portable device.

Sony's Phil Harrison was asked about Live Anywhere and if they're worried about the seamless networking between PC and the 360. He went on to state that the PS3 is a computer because it will have a browser, allow people to watch movies, and other internet entertainment. Now I dunno if they (Sony) is still in damage control from the price announcement (which when I started to think about it isn't really that bad), or what, but the PS3 will not replace my PC, as I have this strong feeling that it will not support a well known word processor, spreadsheet, or database, and It defiantly will not support Visual Studio.