Microsoft Reportedly Pulls Back Development on Its Own Xbox Handheld to Focus on Third-Party Devices

Microsoft has reportedly pulled back on developing its own Xbox handheld console.

Microsoft was reportedly planning to launch its own handheld device sometime around 2027, potentially alongside its next-gen Xbox. Microsoft gaming boss Phil Spencer recently indicated a first-party Xbox handheld was years away.

However, a new report by Windows Central now claims Microsoft's priorities have "shifted," with the team now focusing on improving Windows 11 gaming performance for third-party devices, working alongside partners like Asus on its Xbox-branded handheld device, codenamed Project Kennan. According to Windows Central, staff were internally informed that "priorities are moving more deeply towards third-party OEM handhelds in the interim."

Photos of Asus' Xbox-branded handheld device leaked online earlier this month. Two images of the Asus ROG Ally 2 device — one white, one black — went public via the Indonesian certification office, which linked to a (now deleted) listing on the U.S.'s FCC website. Interestingly, Windows Central's report adds "the hardware side is essentially finished," and is thought to be one of the first devices to use the AMD Z2 Extreme processor.

The tech specs at this time are a little piecemeal, so it's not entirely clear how it'll run or if there's any meaningful difference between the black and white versions. Rumor has it the devices are "currently being tested at Microsoft HQ rather openly as we speak."

Last month, Asus Republic of Gamers' X/Twitter account shared a teaser offering a brief glimpse at both a Republic of Gamers (ROG) Xbox controller and handheld system. The official Xbox account acknowledged the tweet with a cheeky wide-eyed gif, suggesting it was gearing up for a formal reveal.

The successor to the Xbox Series X is reportedly "fully" in production and due out in two years, tying in with Xbox president Sarah Bond's recent comments that Microsoft was "moving full speed ahead on our next generation hardware, focused on delivering the biggest technological leap ever in a generation."

Vikki Blake is a reporter for IGN, as well as a critic, columnist, and consultant with 15+ years experience working with some of the world's biggest gaming sites and publications. She's also a Guardian, Spartan, Silent Hillian, Legend, and perpetually High Chaos. Find her at BlueSky.