Microsoft’s long-rumored Xbox handheld console may no longer be in the pipeline. A new report from The Verge, penned by trusted Microsoft insider Tom Warren, suggests that the tech giant has “essentially canceled” its in-house handheld project. This move reportedly follows a strategic pivot toward enhancing Windows gaming performance and collaborating with third-party manufacturers like Asus.
Microsoft Steps Away from First-Party Handheld Ambitions
Although Microsoft never officially announced plans for a proprietary handheld Xbox, the rumor mill has been buzzing for over a year. Multiple leaks and insider claims hinted at a dedicated Xbox handheld device designed to complement Game Pass, xCloud, and the next-gen Xbox ecosystem.
However, according to Warren’s recent Notepad newsletter, Microsoft has now halted internal development of the device. The decision appears to align with the company’s broader strategy to prioritize software optimization over launching new hardware platforms.
Enter the ROG Xbox Ally
Coinciding with the cancellation rumors is the reveal of the ROG Xbox Ally, a third-party handheld gaming system built in collaboration between Asus and Microsoft. The ROG Ally series now seems to represent Microsoft’s official stance on the handheld gaming market.
These devices ship with a custom-tailored version of Windows, offering a console-like experience that bridges the gap between PC gaming and Xbox-style usability. Instead of building hardware from scratch, Microsoft is now focusing on enabling partners like Asus to lead the charge with portable solutions powered by Windows and Game Pass.
Why the Shift?
There are several key reasons why Microsoft may have shelved its handheld:
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Resource Reallocation: Internal resources are being diverted to improve Windows 11’s gaming experience, including performance and compatibility.
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Third-Party Success: Partnering with brands like Asus offers a faster, lower-risk path to market presence in the handheld space.
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Strategic Clarity: Microsoft seems more focused on software ecosystems and cloud gaming than launching multiple hardware form factors.
No Official Confirmation (Yet)
Microsoft has yet to officially confirm or deny the project’s status, but Warren’s report—backed by a pattern of recent decisions—paints a clear picture. With Microsoft’s increasing emphasis on cross-platform gaming and service-based ecosystems, building a proprietary handheld may no longer align with the company’s long-term vision.
If Tom Warren’s insider scoop proves accurate, fans expecting a first-party Xbox handheld console will have to adjust their expectations. Instead of a bespoke Xbox portable, Microsoft’s answer to the handheld craze may lie in enhanced Windows gaming experiences and powerful partnerships with OEMs like Asus.