Following in the wake of rumors that Microsoft owned developer Rare would be supporting the Nintendo DS portable, Microsoft officials have made a statement that the developer would be "focusing all efforts on developing games for the Windows and Xbox platforms." Adding that, "at this time, there are no plans to support the DS."
However, a report in Windows & .Net Magazine states that one of Microsoft’s game development subsidiaries will support the new portable.
It is widely assumed that Microsoft would prefer Nintendo to continue their dominance of the handheld market, rather than Sony - whose success would likely only further the popularity of the home-based PlayStation consoles.
Source:
Polygon