Microsoft’s next-gen Xbox hardware might be taking a backseat because the company is trying to compete in the handheld market. The tech giant is trying to make Windows-powered handheld gaming devices that can actually compete with SteamOS. Till now, SteamOS has been the best operating system for handheld gaming, and on the other hand, Windows handhelds have had major issues.

Many companies like Lenovo also collaborated with Steam on their Lenovo Legion Go S device and launched a variant that runs SteamOS. This variant has actually beaten the Windows variant of the same device in benchmarks. With SteamOS, the Legion Go S saw significant performance improvements. On the Windows side, the same console is more bloated and power-hungry when it comes to mobile gaming.

That performance gap may have actually alerted Microsoft to deep-dive and optimise Windows for handheld gaming. An insider also suggests that Microsoft is now focussed on improving the Windows handheld gaming experience. This has been the main reason behind the delay in the announcement of a new Xbox console.

Xbox Handheld is still on the Cards

This doesn’t mean Microsoft’s ditching hardware altogether. The Project Kennan which is a rumored Xbox style handheld is still in the works with ASUS. That collaboration could launch in 2025 and might bring a better UI layer on top of Windows to make the gaming experience better. 

Now, talking about the actual Microsoft-branded Xbox handheld, which was expected around 2027. That timeline might still be in place, but right now, Microsoft’s priorities seem to be shifting toward fixing Windows on handhelds.

SteamOS vs Windows

The main concern is not that navigation isn’t smoother on Windows, but rather the performance gap between SteamOS and Windows is the real issue. This concern is huge, as Valve has already progressed in optimising their OS for Ryzen-powered handhelds. Gamers are already noticing smoother frame rates and longer playtime. On the other hand, compatibility with Windows is still better, but with laggy performance, it’s of no use. Hopefully, Microsoft can make a separate version of Windows that is completely made to operate for handhelds.

Coming back to the Xbox Series X successor, it’s still in development. This new console might actually launch in a couple of years, while the new Xbox handheld still looks like it will take more time. With Windows optimisation goals, hopefully Microsoft is able to deliver a handheld that can actually take over, since the Steam Deck seems to be playing it safe.