Microsoft Prioritizes Third-Party Devices Over Xbox Handheld

Reports indicate Microsoft has scaled back plans for developing its own Xbox handheld console.

Microsoft had initially planned to launch proprietary handheld hardware around 2027, potentially aligned with its next-gen Xbox launch. Xbox chief Phil Spencer recently confirmed a first-party handheld remained years from realization.

According to Windows Central, Microsoft has now "shifted" priorities toward optimizing Windows 11 gaming performance for third-party devices instead. The company is collaborating with partners like Asus on their Xbox-branded handheld (codenamed Project Kennan). Internal communications reportedly emphasized focusing "more deeply on third-party OEM handhelds" as an interim strategy.

Xbox Games Series Tier List

Xbox Games Series Tier List

Leaked images of Asus' Xbox-branded handheld surfaced earlier this month through Indonesian certification filings. The documentation showed two ROG Ally 2 variants (white and black models) before being removed from the FCC website. Notably, Windows Central reports the hardware design is "essentially complete," featuring AMD's Z2 Extreme processor among its components.

While full specifications remain unclear, rumors suggest both color variants are undergoing open testing at Microsoft's headquarters. The performance differences between models, if any, haven't been disclosed.

Last month, Asus' ROG social channels teased a collaboration featuring both Xbox-branded controllers and handheld systems. Xbox's official account responded playfully with an excited reaction gif, hinting at imminent official announcements.

This development coincides with Microsoft accelerating production on its next-generation Xbox console. Xbox president Sarah Bond confirmed the company is "moving full speed ahead" on hardware targeting "the biggest technological leap ever", expected within two years.