Microsoft seems interested in an Xbox handheld, but will it commit?

Key members of Xbox's senior leadership team are apparently quite interested in an Xbox handheld, but will corporate greenlight more potentially risky hardware?

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Our predictive Xbox hardware cycle could include a new handheld device, but will it be made by Microsoft, or a third-party partner?

Hardware is not Xbox's strong suit. Unlike other members of the Big 3 (Sony and Nintendo), Xbox does not sell its consoles at a profit. In fact, Microsoft has never sold an Xbox at a profit. The company loses up to an estimated $200 per Xbox Series X sold. Yet Microsoft is still making Xbox consoles because they are critical pathways into its $18.5 billion content and services market--the new Xbox Series X/S duo coming this holiday attest to this, especially with their new higher price tags that help offset the losses.

So...that brings us to an interesting crossroads for Xbox. While the division is trying to expand across all vectors and platforms, there's one area Xbox has been relatively absent: Handhelds. Big-name OEMs like Valve, Lenovo, MSI, and ASUS have created a new hardware market segment with their respective handheld PCs, influenced in no small part by the best-selling Nintendo Switch.

Will Xbox make a handheld? New reports from Bloomberg touched upon the topic, with Xbox president Sarah Bond indirectly commenting on an Xbox handheld.

CEO Phil Spencer has repeatedly discussed his affinity for on-the-go PCs, saying:

"What should we build that will find new players, that will allow people to play at times when they couldn't go play [before]?"

There have also been reports that Xbox has potentially experimented with handheld hardware prototypes.

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Read Also: Opinion: What the future of Xbox console hardware could look like

But nothing has been confirmed by Microsoft, and trends indicate that it may be difficult for Xbox's leadership to convince the board, CFO Amy Hood, and potentially other corporate executives that an Xbox handheld is a good idea. So far, Xbox has simply teamed up with handheld-makers. It's partnership with Logitech with the cloud-only G Cloud handheld is an example.

Remember that Microsoft just acquired Activision Blizzard King for $70 billion, and while Xbox has delivered a record-breaking $21.5 billion in yearly revenues with 9 months of ABK's help, hardware earnings are at their lowest point since the launch of the Xbox Series X/S duo.

At the same time, lower hardware revenues also means potentially lower losses from hardware sales--assuming, of course, this is reflected in the supply chain/production-to-consumer chain.

On the hardware front, Microsoft is currently preparing its next-gen Xbox console that president Sarah Bond says will "deliver the largest technical leap" in console gaming history.

Whether or not an official Microsoft-branded Xbox handheld happens will ultimately depend on the risk vs reward ratio, and how such new hardware fits into the division's budget, especially with all the added weight and pressure of delivering high returns reflective of the $70 billion Activision merger.