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(Pocket-lint) - Microsoft plans to take on cloud-gaming with its own service, according to a new report.

The Verge - citing unnamed sources - claimed that Microsoft held an internal company meeting today, where executives showed Halo 4 running on a Windows Phone and PC as it streamed from the cloud. The demonstration specifically included a Windows Phone, low-end hybrid PC and an Xbox controller attached through an accessory.

Halo 4 allegedly ran smoothly on the devices. Although everything seems to be working well, Microsoft hasn't named the cloud-gaming service yet nor moved it past the the prototype stage. It's apparently trying to ready the service so it can compete with Sony. Sony acquired Gaikai's streaming technology and has plans to debut game streaming on the PS3 and PS4 in 2014.

Today's news echoes information recently divulged by Albert Penello, the senior director at Xbox. When asked whether the Xbox One would ever allow backwards compatibility through streaming, like Sony offers, Penello told Gamespot: "Yeah, absolutely."

He added: "There are so many things that the servers can do. Using our Azure cloud servers, sometimes it’s things like voice processing. It could be more complicated things like rendering full games like a Gaikai and delivering it to the box. We just have to figure out how, over time, how much does that cost to deliver, how good is the experience." 

So it's probably safe to say that Microsoft is indeed working on cloud gaming. In fact, Phil Harrison, vice-president at Microsoft Corporate, revealed during his Eurogamer Expo keynote address that Microsoft plans to support Xbox One for more than a decade with a variety of features and services, including the cloud.

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Writing by Elyse Betters.