By Key Points
- Microsoft cancels internal Xbox handheld project
- Next-gen Xbox console development continues
- Asus to launch ROG Xbox Ally handhelds this year
- Xbox Experience for Handheld aims to boost Windows gaming
According to a fresh report from The Verge, Microsoft has internally shelved its native handheld Xbox console project. Though never officially announced, this device had been the subject of growing speculation across the gaming community.
Source: Xbox – Techtoken
Instead of pursuing its own hardware, Microsoft is now doubling down on collaborations with third-party manufacturers like Asus. Just this week, Microsoft and Asus revealed two new Xbox-branded handheld devices — the ROG Xbox Ally and ROG Xbox Ally X — giving gamers a glimpse of the future for portable Xbox gaming.
Meanwhile, Microsoft is continuing to develop its next-generation Xbox console. Xbox president Sarah Bond has promised that it will offer the “largest technical leap” in the history of Xbox hardware.
Xbox’s own handheld essentially cancelled.
Microsoft sticking to what it knows best, Software.
‘Microsoft’s dedicated handheld is likely canceled as the company focuses on Xbox’s new software platform, according to The Verge.’ pic.twitter.com/66pSAPEpS1
— SpawnYaard 🎮 (@SpawnYaardReply) June 12, 2025
Microsoft shifts focus to software and partnerships
The decision to halt internal development of an Xbox handheld is not a complete surprise. In earlier reports, it was suggested that Microsoft was taking a step back to improve the Windows gaming experience on handheld devices rather than pushing forward with its own hardware.
Now, it seems that the company may have indefinitely postponed those plans. Microsoft Gaming CEO Phil Spencer recently described the partnership with Asus as the “tightest” he has witnessed in his three decades at the company — signaling a clear strategic shift toward collaboration over solo development.
Microsoft’s own Xbox handheld is “essentially cancelled” According to The Verge, Microsoft has “essentially canceled” its native Xbox handheld to focus on the Xbox software platform. Microsoft is still working on the next-gen Xbox… @CosmicMetaX #Xboxhttps://t.co/34iR1tmVNp
— Cosmic Meta IO (@CosmicMetaY) June 13, 2025
These Asus handhelds will run Windows 11 but launch directly into a new optimized interface called Xbox Experience for Handheld. This software is designed to enhance gaming performance by minimizing background processes and reducing Windows bloat, two major pain points for Windows-based portable gaming devices.
Notably, Microsoft is also working with other PC manufacturers, suggesting that the Xbox Experience may eventually become the go-to software layer for various third-party gaming handhelds. If successful, this could give Microsoft a dominant role in the portable gaming software ecosystem, without the risk of investing in first-party hardware.
For now, Microsoft seems to be fully embracing a partner-first approach in the portable space, as seen with the recent surge of Microsoft handheld gaming PC collaborations. This shift also aligns with broader trends in device design — with innovations like liquid glass design starting to influence the next wave of gaming hardware.
Next-gen Xbox on the horizon as competition heats up
While the Xbox handheld project is on ice, Microsoft is pushing full steam ahead on its next-generation Xbox console. Earlier this year, Xbox president Sarah Bond confirmed that a new console is in development, promising groundbreaking improvements.
At the same time, the competition is gearing up. Sony recently teased its own next-generation console — the PlayStation 6 — suggesting that the next battle in the console wars is already underway.
Microsoft’s strategy now appears clear: focus on building the best possible next-gen console, while extending the Xbox platform through software partnerships on handhelds and other devices.
This news comes just as Asus and Microsoft prepare to bring their new ROG Xbox Ally handhelds to market. These devices, which will launch later this year, aim to capture a share of the booming portable gaming space.
Pricing for the ROG Xbox Ally X is rumored to be over $1,000, while the standard ROG Xbox Ally is expected to be more affordable — though exact pricing and release dates remain under wraps.
With strong competition from devices like the Steam Deck and the upcoming Nintendo Switch 2, it remains to be seen how well these Xbox-branded handhelds will perform in a crowded market.
If they succeed, other PC makers like Lenovo could soon join the fray, further expanding the ecosystem of Xbox-capable handhelds. Meanwhile, gamers can also expect new handheld-optimized features to appear in upcoming software updates, possibly even linked to new developments such as Android 16, which is rumored to enhance gaming experiences on Android-based devices.
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