Microsoft is reportedly enhancing its gaming lineup with a new handheld version of the Xbox, projected for release later this year. Concurrently, the company is gearing up to introduce replacements for the current Xbox Series S and X consoles in 2027.

If you’re guessing how a handheld device could launch so quickly, it’s because the project is supposedly derived from a collaboration with a “PC gaming OEM” (like ASUS, Lenovo, MSI, and Razer). This handheld is expected to operate on Windows and will significantly feature the Microsoft Store alongside PC Game Pass.

This suggests that the device may closely resemble existing handheld PCs, such as the Asus ROG Ally X or the Lenovo Legion Go. As there are no indications of custom silicon, AMD’s Strix Point APU is the leading candidate for its processing power.

However, Windows Central hints that this device, codenamed “Keenan,” is more of a research endeavor than a primary revenue source for Microsoft, all part of its strategy to broaden the Xbox ecosystem beyond a singular console approach.

The innovation could potentially lie in a refined version of Windows that manages elements like power consumption and fan speeds more effectively. There’s also hope for enhanced usability with console-style control inputs and a user interface redesigned for touch interactions on a smaller display.

Overall, this echoes Valve’s ambitions to offer SteamOS on partner devices. It remains to be seen how effective Microsoft’s optimization of Windows for this new handheld Xbox device will be—a paramount factor as it joins the handheld gaming market, dominated by the Steam Deck.

In parallel to this new handheld offering, Microsoft has also approved new versions of traditional Xbox consoles, likely including an advanced model to succeed the Xbox Series X, anticipated in 2027.