Xbox Handheld Console Reportedly Sidelined As Microsoft Focuses On Third-Party Devices

Microsoft is allegedly putting the in-house Xbox handheld console on hold.

According to Windows Central, the company has now turned its focus to third-party hardware, especially to make Windows 11 run on handhelds like the upcoming device from ASUS codenamed Project Kennan.

It’s a strategic pivot for Microsoft, which is more focused on strengthening its ecosystem for portable gaming than on making a new console. While Xbox was actively working on its own handheld console, those plans have been “sidelined” according to sources, with the company doubling down instead on building Windows 11 as a strong platform for third-party gaming devices.

The Project Kennan developed in cooperation with ASUS seems to be the current focus of Microsoft’s handheld strategy. Instead of pushing out a first-party device to compete directly with the Steam Deck, Microsoft reportedly focuses its resources on enhancing compatibility, performance, and UX of Windows 11 on portable systems.

Despite this pause in hardware development, the dream of a Microsoft-made handheld isn’t dead. Windows Central reports that Xbox is still “deeply investing” in the long-term vision of a portable gaming device-just not in the immediate future.

Xbox chief Phil Spencer has long been on record about his desire to break into the handheld space, previously telling IGN that “I think we should have a handheld,” indicating that a part of the future of Xbox hardware includes “different form factors” and “different ways to play.”

When questioned if the device was purely cloud-streaming or whether it could support local gaming, Spencer emphasized, “I think being able to play games locally is really important.” This in turn would suggest that any future Xbox handheld seeks the capability to support offline gameplay, something quite important to gamers who cannot always rely on a stable connection with the internet.

In the meantime, Microsoft seems to be playing the long game. Supporting third-party efforts like ASUS’s Kennan improves the overall portable gaming on Windows while amassing valuable data and feedback. That keeps Xbox competitive without jumping into hardware that doesn’t meet their quality expectations.

Although it may be a disappointment for fans who would like to see a new portable Xbox console, Microsoft’s work on making Windows 11 more functional with handhelds is a step in the right direction. The better the OS performs in devices such as the Steam Deck or Project Kennan, the better position Microsoft will be in when ready to launch their own hardware.

So, for the time being, the Xbox handheld console remains on the bench-but not out of the game.