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Handheld gaming lovers, brace yourselves: Microsoft has officially pulled the plug on its much-rumoured Xbox handheld console. After months of speculation, the dream of a portable Xbox to rival the Nintendo Switch and Valve’s Steam Deck has been shelved, with Microsoft choosing a different path for its gaming future.

Why did Microsoft change course?

Why would Microsoft abandon such a promising idea? The answer lies in its new partnership with Asus and the recently unveiled ROG Xbox Ally and ROG Xbox Ally X handhelds. These devices, announced at the Xbox Games Showcase on June 8, 2025, are now the company’s main focus. Early reviews for the ROG Xbox Ally X are glowing, especially for its smooth performance and seamless Xbox integration

The story goes deeper. While a report by The Verge says Microsoft’s own device – codenamed “Project Kennan” – was in the works, the company decided to double down on software and let third-party manufacturers like Asus handle the hardware. The ROG Xbox Ally runs on Windows but offers a special full-screen Xbox UI, blurring the line between PC and console. Xbox president Sarah Bond, speaking at the showcase, summed it up: “For the first time, a player is going to be able to hold the power of the Xbox experience in their hand, and take it with them anywhere they want to go.”

A unified Xbox ecosystem

This shift makes sense. Instead of competing with partners and risking confusion among gamers, Microsoft is betting on a unified ecosystem – one where the Xbox experience can live on any device, not just hardware stamped with the Xbox logo. It is a move that could give users more choice and flexibility, letting them play Xbox games anywhere, using any storefront or app they prefer.

Of course, not everyone is happy. Some fans are disappointed, wondering what a true first-party Xbox handheld might have looked like, and whether it could have been more affordable or innovative than the Asus devices. But it’s worth considering that Microsoft can now focus on perfecting the Xbox software platform, while partners like Asus push the hardware envelope.

So, while the dream of a native Xbox handheld is over for now, the future of Xbox gaming looks more open and portable than ever. Whether this gamble pays off, only time (and gamers) will tell.