Microsoft Halts Xbox Handheld Development to Enhance Windows 11 for Gaming Performance

According to a recent report, Microsoft has halted the development of its Xbox handheld gaming device. This portable console, which was anticipated as part of the next generation of consoles from the company, has now been deprioritized. Reports suggest that the tech giant is focusing on enhancing Windows 11 for handheld devices to compete effectively with Valve’s SteamOS, which is known for its superior performance and energy efficiency. Meanwhile, other upcoming devices such as the Xbox-branded Asus console, referred to as Project Kennan, are believed to remain unaffected by Microsoft’s choices.

Microsoft Redirects Attention to Windows 11 in Response to SteamOS Competition

Windows Central has informed that the internal Xbox handheld console has been postponed, suggesting it could miss the 2027 launch alongside Microsoft’s upcoming Xbox consoles. This first-party handheld is different from other portable consoles, such as Asus’ Project Kennan, which is still anticipated to launch later this year.

The company aims to refine Windows 11 for handheld devices, indicating that forthcoming third-party handhelds might include a more adapted version of Microsoft’s desktop OS. Past reviews of previously launched handheld devices revealed significant challenges with Windows on these platforms, such as subpar battery life, navigation difficulties, and software update issues.

Microsoft’s strategy to prioritize Windows 11 optimization for handhelds may have been influenced by the expansion of SteamOS beyond the Steam Deck. Earlier this year, Lenovo debuted the Legion Go S, which boasts improved performance compared to the Steam Deck and operates on Valve’s system. SteamOS is also anticipated to be featured on various handheld devices in the near future.

Moreover, Microsoft’s challenges aren’t limited to SteamOS; the imminent release of the Nintendo Switch 2 also poses competition. The Japanese console is set to launch in select regions this June, vying with existing portable systems.

Shifting focus to optimizing Windows 11 for handheld use could significantly enhance the user experience on these gadgets. Reports indicate that the Asus Project Kennan console is expected to be released later in 2025. The device was recently identified in a listing on the US FCC website, giving insight into its design.

The information suggests that Microsoft’s first-party handheld may have the capability to run Xbox titles, as the company still plans to introduce a dedicated handheld. However, it is currently uncertain whether this device will debut in 2027 or 2028, coinciding with the arrival of the company’s next-gen consoles.