Microsoft’s Xbox division is reportedly gearing up for a significant push into the gaming handheld market, despite facing challenges in its console business. Since 2024, Microsoft has shifted its focus toward launching first-party titles on rival platforms, which has reportedly led to a record low in console sales in the US. However, Xbox chief Phil Spencer has emphasized that the company remains committed to its hardware business, and new reports suggest that the company is indeed preparing for a major hardware release in the coming years. Microsoft is planning to release an Xbox gaming handheld in 2025, alongside the launch of its next-generation consoles in 2027.
According to a report from Windows Central, Microsoft is collaborating with a major PC gaming OEM to develop the Xbox handheld device, which is expected to launch later this year. While the specific OEM has not been named, industry speculation points to well-known manufacturers like Lenovo, Asus, or MSI—each of which has already released its own gaming handhelds running Windows. The Xbox handheld, codenamed “Keenan,” is said to have a design unmistakably tied to Xbox, featuring a dedicated Xbox guide button, and will likely be built around Windows OS. This will allow users to access Microsoft’s PC Game Pass ecosystem and Microsoft Store, while also supporting other gaming platforms such as Steam and Epic Games Store.
The handheld is expected to be tailored for a seamless Windows experience on the go, addressing some of the criticisms that have been leveled at previous Windows-based handheld devices for lacking an optimized software interface. Microsoft has previously stated its intent to merge the Windows and Xbox ecosystems to improve the gaming experience for portable devices, suggesting that the handheld’s operating system will be fine-tuned for gaming rather than a standard Windows interface.
Looking further ahead, the report indicates that Microsoft is also in the process of developing a next-generation Xbox console, with the launch of the Xbox Series S/X successor targeted for 2027. While Microsoft’s console sales have faced some setbacks in recent years, these moves into new hardware markets show the company’s ongoing investment in its gaming hardware, which could set the stage for a refreshed gaming ecosystem in the years to come.