Nobody expected this to happen, as Nvidia dropped the bomb by announcing their own gaming handheld at the Consumer Electronics Show press conference.
Codenamed Project Shield, this will run on the 72-core Tegra 4 chip which will be very fast, and will have 5 to 10 hours of battery life, it will feature a clamshell-like design with game buttons similar to actual console controllers (directional pad, thumbsticks, 4-button layout and shoulder buttons), this will also run on Android (they announced that they will be using the Jelly Bean version).
The 5 inch screen can view 720p videos with 2941 dpi and has a touchscreen function, on the back portion of the gadget has the MicroSD slot, HDMI and micro USB ports. Aside from playing Android games, it can also stream games from your PC to the handheld or use the TV as an output display.
Nvidia showed some hands-on presentation demonstrating the special features of Shield (such as navigating around Steam and playing Hawken).
Price and release date was not announced as of this moment but they already launched a micro site for Project Shield. Below is the teaser trailer and size comparison image of Project Shield.
Size comparison of Project Shield