In a surprising turn of events for 2025, Microsoft’s ambitions for a first-party Xbox handheld console have been temporarily sidelined. While gamers have eagerly awaited a dedicated native Xbox handheld device, planned originally for a 2027 release alongside the next-gen Xbox console, the tech giant has decided to prioritize enhancing Windows 11 gaming performance and supporting third-party handheld OEMs for now. This strategic pivot reflects Microsoft’s recognition of increasing competition from established players like Valve with its Steam Deck and the rising prominence of PC-based gaming handhelds produced by partners such as ASUS, Lenovo, and Razer.
Contrary to earlier assumptions, the postponed Xbox handheld is not to be confused with the ASUS “Kennan” device, a third-party Xbox partner console that remains on schedule for a late 2025 launch. This distinction highlights Microsoft’s shift towards collaborating with experienced OEMs rather than pushing its own internal designs to market immediately. Rumors suggest that Microsoft’s internal team is still working on multiple prototypes, although their development has paused, with resources now funneled towards optimizing the Xbox ecosystem across Windows 11 devices, including improving Xbox cloud gaming and integrating Xbox services more tightly on popular gaming laptops and handhelds.
Why Microsoft’s Xbox Handheld Console Development Faces Delays
The decision to put Microsoft’s internal Xbox handheld on hold stems from several strategic and market-driven factors. Here’s a detailed look at why this first-party device is currently parked:
- Focus on Windows 11 Gaming Improvements: The push to enhance gaming performance on Windows 11 gaming laptops and handhelds takes priority, especially with competitors like SteamOS offering better battery life and efficiency on devices such as ASUS ROG Ally and Lenovo Legion Go.
- Thriving Third-Party Handheld Ecosystem: Microsoft’s collaboration with partners such as ASUS, Lenovo, and Razer shows promising progress, providing gamers with ready-made Xbox-compatible handhelds that can be launched more quickly.
- Competitive Pressure from Valve and Steam Deck: Valve continues to expand Steam Deck’s influence, encouraging Microsoft to double down on PC gaming handhelds and their ecosystem, rather than rushing a first-party device.
- Resource Allocation: With an ambitious lineup of Xbox content and cloud gaming tech in testing, Microsoft is strategically focusing its engineering resources on software and cloud performance improvements.
| Factor | Impact on Xbox Handheld Development | Examples |
|---|---|---|
| Windows 11 Gaming Enhancements | Shifted focus away from hardware creation | Optimization for ASUS Kennan and Lenovo handhelds |
| Third-Party Partnerships | Allows quicker market entry through OEMs | ASUS “Kennan” device set for late 2025 launch |
| Valve’s Growing Influence | Increased competition, delaying internal hardware | Steam Deck adoption expanding, SteamOS installable on many Windows handhelds |
| Xbox Cloud and Software Ambitions | Teams focused on next-gen cloud gaming latency improvements | Testing in Redmond HQ for cloud performance parity with NVIDIA GeForce Now |
Distinguishing Microsoft’s First-Party Handheld from Third-Party Xbox Devices
It’s essential for fans to understand the differences between Microsoft’s internal gaming handheld and the devices produced in partnership with OEMs like ASUS, Lenovo, and Acer. The much-anticipated ASUS “Kennan” project continues on track, expected to launch by late 2025 and showcase solid hardware featuring AMD’s latest chips. This device emphasizes Windows 11 compatibility enhanced with Xbox app layers rather than a native Xbox console experience.
Meanwhile, Microsoft’s first-party handheld seeks to deliver a more integrated Xbox portable console experience, capable of running full Xbox titles natively. However, the resource reallocation means this vision is on hold as Microsoft tests different prototypes under multiple codenames, prioritizing a long-term strategy while leveraging partnerships in the meantime.
- Microsoft’s First-Party Handheld: Experimental, native Xbox gaming focus, presently shelved.
- ASUS Kennan and Other Third-Party Devices: Using Windows 11 platform with Xbox app enhancements, ready for launch soon.
- Lenovo Legion Go & Razer Collaborations: Expanding Windows-based Xbox handheld ecosystem.
| Device | Manufacturer | Platform | Status | Expected Release |
|---|---|---|---|---|
| Xbox First-Party Handheld | Microsoft | Native Xbox console OS (planned) | On hold | Unconfirmed (post-2027?) |
| Project Kennan | ASUS | Windows 11 with Xbox enhancements | Hardware mostly complete | Late 2025 |
| Lenovo Legion Go | Lenovo | Windows 11 | Available | 2024 |
| Razeri-Handheld Collaboration | Razer | Windows 11 | In development | 2025-2026 |
The Growing Influence of Windows 11 on the Future of Xbox Handheld Gaming
Microsoft’s strategic shift towards Windows 11 as the primary platform for Xbox handheld gaming devices highlights a broader industry evolution. The advent of devices such as the ASUS ROG Ally and Lenovo Legion Go running native Windows 11 demonstrates how the PC gaming ecosystem is converging with handheld console markets. This trend encourages manufacturers like Acer, Samsung, and Logitech to innovate and supply gamers with more versatile hardware options.
- Windows 11’s gaming optimization: Delivers better driver support, DirectX 12 improvements, and seamless Xbox Game Pass integration.
- Cloud Gaming Expansion: Xbox Cloud Gaming’s next-gen platform aims to rival NVIDIA GeForce Now for low latency and broad service integration.
- SteamOS Competition: Valve’s open SteamOS, with compatibility for devices like ASUS ROG Ally and Steam Deck, poses a challenge to Windows dominance.
As the line between PC and console gaming continues to blur, Microsoft aims to leverage Windows 11’s flexibility to unify its gaming ecosystem. The company is also actively investing in the development of cloud streaming infrastructure that promises competitive latency and expandability, harnessing partnerships with OEMs while planning a future return to first-party handheld hardware.
| Aspect | Windows 11 Ecosystem Strength | Competing Platforms | Microsoft’s Strategic Response |
|---|---|---|---|
| Hardware | Broad OEM support (ASUS, Lenovo, Acer) | Steam Deck hardware from Valve | Support third-party portable Xbox devices |
| Software & Gaming Services | Xbox Game Pass integration and DirectX 12 optimization | SteamOS with Steam client support | Invest in Xbox app and native cloud gaming services |
| Cloud Gaming | Next-gen Xbox cloud with lower latency testing | NVIDIA GeForce Now | Focus on parity and expanded device compatibility |
Learn more about the evolution of handheld devices and Xbox’s strategic shifts at Xbox Handheld Project Kennan and discover the latest on Xbox next-gen handheld consoles. For those interested in how console gaming is evolving against the PC tide, PC Makes Console Gaming Unplayable offers insightful analysis. Meanwhile, explore the animated world of Nintendo’s handheld dominance at Consoles Nintendo Switch.