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Pass The Controller > Release > Microsoft Has Essentially Cancelled Development of its Own Xbox Handheld – Rumour
Release

Microsoft Has Essentially Cancelled Development of its Own Xbox Handheld – Rumour

June 13, 2025 4 Min Read
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asus rog xbox ally

There have been reports that Microsoft will pause its development of its own Xbox handheld gaming system and work with other companies, but a new report from Verge’s Tom Warren shows that development pauses could be permanent. According to the report, Microsoft is not creating its own, but is now all-in-the-box development as a software platform for handheld gaming systems.

Warren’s report internally shows that handheld system plans could be more or less cancelled. Microsoft plans to gain a stronger foothold in the handheld market by working with companies like ASUS, as seen in the recent announcement of the Rog Xbox Ally lineup. The report also shows that Microsoft may be working on next-generation consoles as well.

“I think Microsoft’s next-gen Xbox hardware is still visible, but I strongly believe that multiple devices from PC manufacturers like ASUS are considered to be next-gen Xbox consoles,” writes Warren.

Generally speaking, this comes with Microsoft’s ambitions for Xbox in the long term. These ambitions were first seen in 2012 when the Xbox One was announced. Microsoft essentially wanted to take over the living room with hardware. However, over time the plans changed. Now, Microsoft wants to ensure that gamers can buy and play Xbox games on any platform they can.

In the meantime, Warren assumes that Microsoft may be working on emulation internally to make Xbox console games playable on Windows. There is reportedly a new internal team focused on saving the game. However, it takes a lot of work to get the game from the original Xbox, Xbox 360, and Xbox One game running on the latest PC hardware. Until then, Microsoft has been supplying services such as Xbox Cloud and services such as Xbox Play’s new push. This allows players to purchase the game once through the Microsoft Store and access it on their Windows or Xbox devices.

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In the long run, Microsoft could potentially turn Xbox into an in-house game brand. It could potentially acquire another generation of consoles in the coming years, but the company may be interested in making Windows a major platform for both PC and consoles.

Reports that Microsoft has put on hold on development of its own handheld have originally returned in May. At the time, rather than working on its own hardware, Microsoft decided to work together the gaming and Windows departments to make Windows 11 more optimized and gaming-friendly. It is noteworthy that improvements made through this initiative are likely to benefit PC players in the long term.

Microsoft is facing competition in gaming, especially in the handheld market, thanks to Valve’s Steam Deck success. Valve has released Linux-based Steamos as its own operating system, allowing users to install and play the game on AMD-based hardware.

For more information about Microsoft’s push to handheld games, see the ASUS ROG Xbox Ally and Rog Xbox Ally X coverage.


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