Microsoft has recently shifted its focus in the gaming hardware sector, pausing the development of its in-house Xbox handheld console to prioritize enhancing Windows 11 for third-party handheld devices. This strategic move underscores Microsoft's commitment to optimizing the gaming experience on partner-made devices, notably ASUS's "Project Kennan," which is reportedly nearing its commercial launch.
The decision to halt the internal handheld project does not impact the development timeline of the Xbox Series X successor, which remains on schedule. Sources indicate that Microsoft had multiple hardware prototypes under the Gen-10 program, including a native Xbox-branded handheld. While codenames like "Pembrooke" were initially associated with this device, recent clarifications suggest those details may be inaccurate. As of now, that device has been put on hold as the company reprioritizes engineering resources.
This shift reflects a broader internal strategy to address competitive threats posed by platforms like Valve’s SteamOS. SteamOS, currently gaining traction on devices like the Steam Deck and now available for the ASUS ROG Ally and Lenovo Legion Go, has been noted for improved battery efficiency and gaming performance compared to Windows 11.
Microsoft’s new emphasis centers on third-party OEM handhelds running Windows 11. The most prominent among these is the ASUS-manufactured "Project Kennan." Although unconfirmed, it is believed to feature AMD’s new Z2 Extreme chip and is expected to release later this year.
Work is intensifying between Microsoft’s Xbox and Windows development teams to improve software optimization, particularly for handheld devices already using standard Windows 11 environments. Enhancements to Xbox app integration, performance tuning, and input compatibility are all part of the roadmap.
SteamOS’s rapid adoption and performance metrics have sparked internal urgency at Microsoft. With Valve’s ecosystem supporting seamless integration and lower system overhead, the appeal of non-Windows platforms is growing, especially among handheld gaming enthusiasts.
At the same time, Microsoft continues to invest in its cloud gaming initiatives. Next-generation Xbox cloud architecture is currently in testing, aiming to reduce latency and compete directly with NVIDIA’s GeForce Now. A previously shelved cloud-first console codenamed "Hobart" is not expected to return, but cloud infrastructure remains a strategic pillar.
Microsoft’s upcoming Xbox Showcase, set for June 8, 2025, will highlight new software offerings and content from its network of game development studios. While hardware announcements may take a backseat, the company’s strong content library and Xbox Game Pass momentum remain core strengths.
Despite the shift in short-term priorities, Microsoft is not abandoning handheld ambitions altogether. Internal investment in native Xbox handheld technology continues, albeit at a slower pace. No job cuts have occurred due to the reprioritization.
Source: BizzBuzz Xbox Handheld Delayed as Microsoft Backs ASUS Project Kennan
