7 Big Ways Microsoft Is Reinventing Handheld Gaming PCs

Key Points

• Microsoft debuts full-screen Xbox mode for handheld PCs
• New ROG Xbox Ally devices integrate Windows and Xbox
• Improved Game Bar and power efficiency for portable play
• Xbox app will now aggregate all your PC games

At Computex 2025, Microsoft and Asus unveiled two new ROG Xbox Ally handheld gaming PCs. But the hardware isn’t the headline — it’s the software.

Microsoft is finally blending Windows and Xbox to create a full-screen gaming experience that feels designed for handhelds. This is a major play to challenge Valve’s SteamOS and the dominance of the Steam Deck.

The Xbox Ally X has its own Xbox custom boot screen that takes you straight into the Xbox app on Windows. Image: Microsoft – Techtoken

And it’s not just a visual refresh. Microsoft is reengineering how Windows runs on these devices to deliver faster, more efficient, and gamer-focused performance — much like how Apple’s AI features are now reshaping iPhones and iPads.

I got a demo of how Microsoft is combining Xbox + Windows for handhelds. There’s a new full-screen Xbox experience for Windows, which includes booting directly to an Xbox UI and not even loading lots of parts of Windows. Full deep dive here 👇 https://t.co/f5w9NTRv52

— Tom Warren (@tomwarren) June 8, 2025

Full-screen Xbox mode brings a console feel to Windows handhelds

The new Xbox Ally X and its sibling boot straight into a full-screen Xbox experience.

Gone is the cluttered Windows desktop. Instead, you get an Xbox-first interface where your game library from Steam, Epic, and Xbox Game Pass lives side by side. Microsoft calls this the “compact mode” of the Xbox app, and it’s the biggest shift we’ve seen yet toward handheld-friendly Windows gaming.

wooow i have to check this out
they basically like i said customize the OShttps://t.co/CNnmCfG0D8

this basically ala Windows12 (using custom w11 optimized)
-boot directly to Xbox
-almost non gaming related services is disabled
all this things pave the way to XBox PC hybrid😎 pic.twitter.com/JiuD8tOV30

— blue nugroho (@blueisviolet) June 9, 2025

“When the player boots into the full-screen experience, a whole bunch of Windows stuff doesn’t get loaded,” explained Jason Beaumont, Xbox VP of experiences. That means no desktop wallpaper, no taskbar, and fewer background processes — freeing up memory and improving performance.

In early tests, Microsoft says about 2GB of RAM is reclaimed for games. That’s a real boost for demanding titles.

Battery life also sees big gains. In full-screen mode, idle power draw is reduced by two-thirds compared to the standard Windows desktop experience. This is a key pain point for handheld gaming PCs, and Microsoft knows it.

The full-screen Xbox experience on the Xbox Ally X. Image: Microsoft – Techtoken

This push for more optimized and visually stunning interfaces in handhelds is in line with the broader industry trends we’re seeing — such as the development of the Liquid Glass design for next-gen devices.

Game Bar and new features make handheld play seamless

The Xbox Game Bar is getting smarter too. Now, a short press of the Xbox button brings up an overlay where you can:

• Adjust device settings (Wi-Fi, Bluetooth)

• Access Asus’ Command Center

• Tap into Microsoft’s new Gaming Copilot assistant

• Switch between games and apps with a handheld-friendly task switcher

Long-pressing the Xbox button lets you alt+tab between apps — all using the controller.

ICYMI: Xbox announced its handheld console in partnership with ASUS ROG.

Rog Xbox Ally and Rog Xbox Ally X available this holiday with access to Windows 11 – including Xbox PC app, Battle net, and more PC stores. pic.twitter.com/02WsEQL3bT

— CharlieIntel (@charlieINTEL) June 9, 2025

“You can even log into Windows using a PIN and your controller now,” added Brianna Potvin, Xbox engineering lead. Microsoft has tweaked the lockscreen so players no longer need to fumble with a touchscreen or keyboard.

And yes — this new Xbox experience isn’t limited to Xbox games. Microsoft has opened the door for full library integration:

• Steam

• Epic Games Store

• Xbox Game Pass PC

• Xbox Play Anywhere titles

“We’re working closely with leading storefronts to have them optimize their full-screen experience,” said Roanne Sones, Xbox VP of gaming devices and ecosystem.

This kind of seamless integration mirrors what’s happening in the mobile space, where companies like Apple are unifying experiences across devices — such as with the launch of the iPhone 16e with AI, 48MP camera, and big battery.

The new library includes access to PC games from Steam and others. Image: Microsoft 

The new library includes access to PC games from Steam and others. Image: Microsoft

A new push to challenge SteamOS and shape the future of handheld gaming

Microsoft also revealed it’s building a Steam Deck-style verification program, so players can easily see which games run best on handheld PCs like the Xbox Ally and Ally X.

And if you already own a ROG Ally? You won’t be left behind. Microsoft confirmed this full-screen Xbox experience will roll out to existing ROG Ally devices later this year.

Next year, other Windows handhelds will get the update too. This is part of a broader strategy to make Windows the platform of choice for handheld gaming — not Linux-based SteamOS.

But the competition is heating up: Valve is supporting SteamOS on the ROG Ally as well, giving gamers a unique chance to compare both OS options on the same hardware.

The big question remains: Will these deep Windows optimizations be enough to stop other PC makers (like Lenovo) from jumping ship to SteamOS? It’s a battle of ecosystems, similar to the one brewing around the Apple Search Engine risks and whether it will ever truly challenge Google.