Microsoft Reportedly Halted Xbox Handheld for Third-Party Focus

Reports indicate that Microsoft has scaled back its plans to develop a dedicated Xbox handheld console.

The company was rumored to be targeting a 2027 launch for its own handheld device, possibly aligned with the next-generation Xbox. Microsoft Gaming CEO Phil Spencer recently suggested that a first-party Xbox handheld was still several years off.

However, a new Windows Central report states that Microsoft's priorities have "shifted." The team is now concentrating on enhancing Windows 11 for gaming on third-party handhelds, collaborating with partners like Asus on a device codenamed Project Kennan. According to the report, staff were told that "priorities are moving more deeply towards third-party OEM handhelds in the interim."

Images of Asus's Xbox-branded handheld surfaced online earlier this month. Two photos of the Asus ROG Ally 2—one white and one black—appeared via an Indonesian certification body, linked to a since-removed U.S. FCC listing. The Windows Central report notes that "the hardware side is essentially finished" and it is expected to be among the first devices equipped with the AMD Z2 Extreme processor.

Detailed technical specifications remain scarce, making it unclear how the device will perform or if there are significant differences between the color variants. Rumors suggest the units are "currently being tested quite openly at Microsoft HQ."

Last month, the Asus Republic of Gamers X/Twitter account posted a teaser briefly showing both a ROG Xbox controller and a handheld system. The official Xbox account responded to the tweet with a wide-eyed GIF, hinting at an impending official announcement.

The successor to the Xbox Series X is reportedly now "fully" in production and slated for release in two years. This aligns with Xbox President Sarah Bond's recent statement that Microsoft is "moving full speed ahead on our next-generation hardware, aimed at achieving the largest technical leap in a hardware generation."