Microsoft has hit pause on its much-rumoured Xbox handheld console, instead shifting focus to refining Windows 11 for handheld gaming devices, sources have revealed.

While Microsoft hasn’t fully scrapped plans for a dedicated Xbox handheld, the company is now prioritising improvements to the Windows gaming experience on third-party devices like ASUS’s upcoming ‘Project Kennan’.

The move comes as Valve’s SteamOS continues to pressure Windows in the handheld space, offering improved performance and battery life on devices like the Lenovo Legion Go and ASUS ROG Ally.

Industry insider Jez Corden, who first broke the news, says Microsoft internally reprioritised resources to better support Windows 11 handhelds, including third-party OEMs and OS optimisation.

ASUS ROG Ally

Project Kennan, a collaboration between Microsoft and ASUS, is believed to be nearing hardware completion, with a launch expected later this year.

Current efforts focus on UI improvements and deeper Xbox integration to make the experience more seamless for handheld gamers.

The delay does not affect development of the Xbox Series X successor, which is reportedly still on track for a 2027 release.

However, the fate of Microsoft’s in-house handheld, which some insiders believed was also targeting a similar launch window, is now less certain.

SteamOS’s rise has highlighted Windows 11’s inefficiencies on portable devices, spurring Microsoft to take action. Valve’s platform delivers better performance, longer battery life, and is gaining traction with more Ryzen-powered handhelds.

With the Xbox Showcase scheduled for June 8, eyes will be on Microsoft to see how it addresses the rapidly evolving handheld market.