Microsoft has reportedly put its in-house Xbox handheld console on hold.
According to Windows Central, the company has shifted its attention toward third-party hardware, with a specific focus on optimizing Windows 11 for handhelds like ASUS’s upcoming device, codenamed Project Kennan.
The shift marks a strategic pivot for Microsoft, as it looks to enhance its software ecosystem for portable gaming instead of diving headfirst into building a new console. Sources say Xbox had been actively developing its own handheld console, but plans have been “sidelined” for now as the company doubles down on making Windows 11 a solid platform for third-party gaming devices.
Project Kennan, developed in collaboration with ASUS, seems to be the current center of Microsoft’s handheld strategy. Rather than pushing out a first-party device to compete directly with the Steam Deck, Microsoft is reportedly channeling its resources into improving compatibility, performance, and UX of Windows 11 on portable systems.
Despite this pause in hardware development, the dream of a Microsoft-made handheld isn’t dead. Windows Central reports that Xbox is still “deeply investing” in the long-term vision of a portable gaming device, just not in the immediate future.
Xbox head Phil Spencer has been vocal about his interest in entering the handheld space. In a previous interview with IGN, Spencer said, “I think we should have a handheld,” adding that the future of Xbox hardware includes “different form factors” and “different ways to play.”
When asked whether the device would rely entirely on cloud streaming or support local gaming, Spencer emphasized, “I think being able to play games locally is really important.” That signals any future Xbox handheld would aim to support offline gameplay-a key feature for gamers who don’t always have a stable internet connection.
In the meantime, Microsoft seems to be playing the long game. By supporting third-party efforts like ASUS’s Kennan, it can improve the overall portable gaming experience on Windows while collecting valuable data and feedback. This lets Xbox stay competitive without rushing into hardware that may not yet meet their quality expectations.
While fans hoping for a new Xbox portable console may be disappointed, Microsoft’s focus on making Windows 11 more functional for handheld devices is still a step forward. The better the OS performs on devices like the Steam Deck or Project Kennan, the better position Microsoft will be in when it’s ready to launch its own hardware.
So for now, the Xbox handheld console remains on the bench-but not out of the game.
