Microsoft has reportedly cancelled plans to release its own Xbox handheld console. The decision comes as the company appears to focus more on software, licensing, and collaborations with other hardware makers rather than producing a portable console in-house.
The story began when hardware leaker KeplerL2 claimed Microsoft dropped its handheld project after AMD required a minimum order of 10 million units to make a custom chip for the device. That number was seen as unrealistic for a handheld system, especially since Valve’s popular Steam Deck has yet to reach that sales figure.
However, some industry insiders questioned the accuracy of the claim. Jez Corden from Windows Central said the 10-million figure “isn’t even slightly true,” suggesting the rumor may have been overstated. Microsoft hasn’t made any official statements about the project, leaving fans unsure whether the handheld was truly cancelled or just delayed.
Although the first-party handheld may be off the table, Microsoft seems to be taking a different route. Instead of building its own system, the company is working with other manufacturers to bring Xbox experiences to handheld PCs.
In June 2025, Microsoft teamed up with ASUS to launch the ROG Xbox Ally and ROG Xbox Ally X, portable devices that run Windows and are built with Xbox integration in mind. The systems include a mode that boots straight into the Xbox app, giving players access to Game Pass, cloud streaming, and Play Anywhere titles right out of the box.
This lets Microsoft expand its presence in the handheld market without the cost and risk of producing new hardware. By focusing on software and compatibility, the company is giving players more ways to access Xbox games across devices.
If the cancellation reports are accurate, the move was likely about practicality and timing. Producing 10 million handhelds would have been a major financial risk in a market already crowded by the Steam Deck, ROG Ally, and Lenovo Legion Go.
Some analysts said Microsoft’s stock dipped slightly after the news spread, though the company later confirmed it’s still developing next-generation Xbox consoles and remains committed to its hardware division. Microsoft also continues to partner closely with AMD, suggesting it’s refining its hardware strategy rather than walking away from it.
It’s still possible that Microsoft could revisit the idea of a dedicated handheld later on. But for now, the company appears to be betting on partnerships like the ROG Xbox Ally to carry the Xbox brand into the portable space.
Whether this direction becomes Xbox’s long-term approach or just a short-term experiment remains to be seen. For now, the dream of a Microsoft-made handheld seems to be on hold, giving way to a more flexible, software-focused future.
This is so sad 😞!