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Microsoft's Next-Gen Gaming Strategy: Xbox Handheld, Xbox PC Hybrid, or Both?

Microsoft's gaming strategy involves developing a handheld device and a next-generation Xbox, potentially launching the handheld by late 2025 under codename "Keenan." The 2027 Xbox generation aims to function more like a PC, featuring increased backward compatibility and an open ecosystem.

Microsoft's Next-Gen Gaming Strategy: Xbox Handheld, Xbox PC Hybrid, or Both?

Is Microsoft Developing an Xbox Handheld?

Microsoft has hinted at a handheld gaming device for a long time, but there is still no official word. While the company keeps improving the software experience on Windows-based gaming handhelds, reports conflict on when an Xbox device will actually appear. Looking further ahead, there is plenty of speculation about whether Microsoft's next generation of consoles will stick with the traditional console model at all.

Microsoft's next-gen gaming strategy: Xbox handheld, Xbox PC hybrid, or both?

According to Windows Central, Microsoft plans to launch a handheld before the end of 2025, one that could serve as a reference design for Windows-based gaming handhelds. Other sources dispute this, however, saying an Xbox handheld will not arrive this year.

Another rumor claims Microsoft is working with a third-party manufacturer on a device codenamed "Keenan" that runs Windows, much like the Asus ROG Ally or the Lenovo Legion Go. Unlike those devices, though, this Xbox handheld may include an Xbox Guide button and use Xbox's design language. If true, the device could mark a major shift in Microsoft's strategy, as the company blends Windows and Xbox elements to optimize the gaming experience on handhelds.

Will the Next Xbox Be More PC-Like Than Ever?

Whether or not an Xbox handheld becomes reality, Microsoft is still preparing the next generation of Xbox, rumored to launch in 2027.

According to sources, Microsoft has formally approved plans to develop a new Xbox system, with the ambition of delivering the biggest technological leap in the company's history. Notably, the device will behave more like a PC than any previous Xbox generation.

I've seen the report about Microsoft's Project Keenan, and just to be clear there is no first-party "Xbox handheld" arriving in 2025. Keenan is part of PC gaming handheld work with OEMs, like Microsoft's VP of Next Gen told us at CES www.theverge.com/2025/1/7/243...

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- Tom Warren (@tomwarren.co.uk) 11 March 2025 at 04:09

The new Xbox will support backward compatibility, making it easy for players to revisit games from earlier generations. Game developers also won't need to put in much work to move games between PC and Xbox, which makes the ecosystem more open.

Combined with the plans Microsoft announced at CES and Phil Spencer's statements about bringing third-party game stores to Xbox, the question becomes: will the next Xbox generation still be a true console? If the 2027 Xbox is really a full Windows system optimized for gaming, it could mark a revolution in Microsoft's gaming strategy and completely change how the company approaches the console market.

Whether it's an Xbox handheld, a next-generation Xbox, or both, Microsoft is clearly taking steps to reshape the future of its gaming hardware, aiming to combine the power of the PC with the Xbox ecosystem for a more flexible gaming experience than ever.

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