NVIDIA has surprised the tech community by announcing Project Shieid a handheld gaming device at this year's CES (Consumer Electronics Show).

The device resembles an Xbox controller with a display, and runs the Android operating system. It is designed to work with Steam, the online gaming service that rivals Apple's App Store for gaming distribution on Windows, Mac, and recently Linux. The device can also link to a PC with an NVIDIA graphics card and play PC-quality games over WiFi.

The Project Shield device combines a 5in touch-screen display with dual joystick buttons in a clam-shell design. 

Project Shield

NVIDIA has previously only manufacturered chips for other manufacturers, and graphics cards for computer systems. The latest generation of iMac computers run NVIDIA graphics cards.

While the news is surprising, it does show that the handheld market for gaming is moving away from traditional companies like Nintendo and Sony (both of which are suffering heavily from upheavel in the games market). The Apple iPad is thought to be one of the main causes of disruption in the games market, with Apple's App Store and handheld iOS devices taking a huge share of the portable gaming market.

NVIDIAs Project Shield is unlikely to rival iOS devices directly, being obviously designed for the specific purpose of playing games (and quite high-end videogames by the look of it). The console has a 720p display and is powered by a quad-core Tegra 4 chip.

The device sports a Shield button that takes gamers to a curated games store featuring titles from the Google Play marketplace. So users will be able to download Android games and stream Steam-powered NVIDIA games, although the difference between traditional consoles and PCs and mobile devices is diminishing fast. The PlayStation Vita, for example, seems largely the same as the PS3 to our eyes.

Perhaps the only downfall of the device is that it is only capable of streaming PC games via a local network, in the initial stages it will not be able to stream PC games over the internet, although this is the long-term plan. In this sense Project Shield appears similar to the OnLive gaming service, which streams games from a remote server to a computer or small gaming console attached to a computer, the difference being that users download, store, and own games on their own computers.

What, if any, impact devices like these have on the portable gaming market and Apple in particular remain to be seen. It's certainly not aimed at the general consumer market, although hardcore gamers are keen to have portable options more powerful and dedicated than iOS and Android touch-screen devices.