ultimateimp – Microsoft has paused the development of its own Xbox-branded handheld console. The device was initially expected to launch alongside the company’s next-generation Xbox consoles, possibly in 2027. According to a report from Windows Central, this internal project is no longer a top priority.
Instead, Microsoft has shifted its attention to improving Windows 11 for use on third-party handheld gaming devices. This shift indicates a strategic move to strengthen the gaming ecosystem across more platforms. The Xbox team reportedly decided to shelve the native handheld in favor of refining the software experience.
Microsoft still plans to enter the handheld space with a dedicated Xbox device in the future. However, that release is no longer on the near-term roadmap. The delay reflects a change in strategy rather than a cancellation of the project.
SteamOS Expansion Puts Pressure on Microsoft’s Handheld Strategy
Valve’s SteamOS has become a growing competitor in the handheld gaming market. It powers the Steam Deck and now other devices, including Lenovo’s Legion Go S. These devices offer strong performance, long battery life, and a user interface optimized for handheld use.
SteamOS’s growing presence likely influenced Microsoft’s decision to shift its focus. Windows 11 struggles with handheld devices due to interface limitations and poor battery optimization. Valve’s software, by contrast, is more tailored to the unique demands of portable consoles.
Microsoft appears to be responding to this by improving Windows 11’s handheld support. This includes better navigation, streamlined updates, and power management improvements. By doing so, Microsoft hopes to offer a better experience for users of Windows-based handhelds.
Third-Party Devices Like Project Kennan Remain Unaffected
While Microsoft has delayed its own handheld device, third-party consoles like Asus’ Project Kennan remain on schedule. This Xbox-branded device is still expected to launch later in 2025. A recent US FCC filing confirmed development is progressing steadily.
Project Kennan will likely benefit from Microsoft’s improved Windows 11 support. The operating system updates will help third-party handhelds run more efficiently and deliver a better user experience. These devices may soon compete more effectively with SteamOS-based consoles.
Microsoft is working closely with hardware partners to ensure smoother integration between Windows and portable form factors. This cooperation could lead to more Xbox-branded handhelds from third-party manufacturers in the near future.
Windows 11 Optimization Becomes a Key Focus for Gaming
Improving Windows 11 for handheld gaming is now a major part of Microsoft’s strategy. The company is addressing long-standing issues such as interface clunkiness, battery drain, and update interruptions. These problems have held back Windows-based handhelds from reaching mainstream success.
By refining Windows 11, Microsoft hopes to create a better foundation for portable gaming. The changes may also benefit traditional Windows laptops and tablets that support gaming. This shift allows Microsoft to support a wider range of devices without needing to build new hardware.
The move reflects Microsoft’s commitment to software as the core of its gaming experience. It also aligns with the company’s broader approach of supporting gaming across multiple platforms, including cloud and PC.
Microsoft May Still Launch Xbox Handheld in the Future
Although the internal handheld project is shelved, Microsoft has not abandoned its plans for a native Xbox portable console. Reports suggest the device could still debut around 2027 or 2028. That timeline would coincide with the launch of the next-generation Xbox hardware.
Microsoft could use that time to refine both hardware and software for a smoother launch. The future Xbox handheld might run a more optimized version of Windows 11 or a dedicated gaming OS. The company will likely observe how third-party devices perform before deciding on a final approach.
This delay may work in Microsoft’s favor, giving them time to react to the competition. By then, the market will also include the Nintendo Switch 2 and a new generation of SteamOS-based devices. If Microsoft can deliver a high-quality portable with strong ecosystem support, it could still make a big impact.
For now, Xbox fans can expect continued improvements to Windows 11 on handhelds—and more powerful third-party devices to arrive soon.
