Here’s what Microsoft may be planning for its handheld Xbox console

Microsoft is reportedly planning to enter the PC gaming handheld market soon. The tech giant is said to be planning to make its first major venture into this hardware category with a partner device, which may release this year. This move coincides with the ongoing production of successors to the Xbox Series X|S consoles, indicating a multiple hardware strategy for Microsoft's gaming division.

According to a report by Windows Central, Microsoft is collaborating with a PC gaming OEM to develop an Xbox-branded handheld gaming console. Codenamed "Keenan," the handheld Xbox console is expected to release later this year.
The device may incorporate Xbox design elements, including an official Xbox guide button, and will run full Windows—featuring the Microsoft Store, PC Game Pass, and support for apps like Steam.
This device is expected to serve as a research platform for testing new Windows 11 “device aware” capabilities, reducing typical OEM bloatware, and utilising Xbox Game Bar widgets for system controls such as TDP and fan speed.

As per the report, questions have been raised about the long-term impact of this handheld device on traditional Xbox consoles. Microsoft is expected to continue releasing new hardware for its legacy Xbox audience despite quarterly declines in console sales.
Microsoft has received full approval from CEO Satya Nadella for the Xbox Series X|S successor, the report adds. The company's next-generation hardware plans also include a high-end replacement for the Xbox Series X, an Xbox gaming handheld, and multiple new controller options. These console devices are currently scheduled for release in 2027.
Meanwhile, the company's overall monthly active user base has increased, driven by its acquisition of Activision-Blizzard and its mobile gaming portfolio, with titles like Diablo Immortal and Call of Duty contributing to this growth.