Microsoft Shifts Focus to Third-Party Xbox Handhelds

Microsoft has reportedly scaled back its internal development of a dedicated Xbox handheld console, shifting focus toward optimizing Windows 11 for third-party gaming devices and collaborating with OEM partners like Asus.

Previously, there were reports that Microsoft was eyeing a potential 2027 launch window for an in-house handheld console, possibly aligned with the release of its next-generation Xbox hardware. Xbox chief Phil Spencer also acknowledged that such a device was still "years away," fueling speculation around Microsoft's long-term strategy.

However, according to a new report from Windows Central, internal priorities have evolved. The company is now emphasizing deeper integration and performance enhancements for Windows 11 on third-party handhelds. This includes close collaboration with hardware partners such as Asus, particularly on its upcoming Xbox-branded portable device, codenamed Project Kennan. Employees were reportedly informed that "[ttpp]" would be the focus for the near future.

This news follows recent leaks of Asus’ Xbox-themed handheld. Images of what appeared to be the ROG Ally 2 in both white and black color options surfaced online via a now-removed U.S. FCC listing linked to an Indonesian certification database. According to sources, the device’s hardware design is already finalized and may be among the first to feature AMD’s Z2 Extreme processor.

Exact performance details remain unclear, but it’s said that working prototypes are currently being tested openly at Microsoft headquarters, hinting that the project is well underway.

Last month, Asus Republic of Gamers (ROG) teased both a custom Xbox controller and a handheld system via a brief video posted on its official X/Twitter account. The tweet received a playful response from the official Xbox handle, which shared a wide-eyed GIF—possibly signaling anticipation for an official reveal.

Meanwhile, Microsoft continues pushing forward with its next-gen Xbox console. Xbox president Sarah Bond recently confirmed that the successor to the Xbox Series X is fully in production and expected to launch within two years. She described the effort as a mission to deliver “the biggest technological leap ever in a generation.”