Xbox-branded PC handheld coming in 2025, but it won't be a first-party Microsoft device

Microsoft is teaming up with third-party OEMs to make an Xbox-branded PC gaming handheld that's targeting release in 2025, sources tell Windows Central.

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Xbox is everywhere these days, including new form factors like handhelds. Microsoft has already tried to push cloud-only handheld gaming by partnering with Logitech for its G Cloud device, and now reports say that Microsoft will do the same with dedicated PC handhelds.

The new device won't be official Microsoft first-party hardware, though. So the term 'Xbox handheld' is a misnomer--it's more of a handheld with an Xbox button-logo on it, one that likely runs a specific new OS with a UI optimized for handhelds (we know from experience that Windows 11 is not great for these screens). The new handheld is said be part of a hardware project that's codenamed "Kennan".

Xbox gaming CEO Phil Spencer has commented on an Xbox handheld in the past, saying that such a device was years away. Earlier reports had said that a handheld were in development internally at Xbox, but it's likely that these reports were referring to Kennan and not a console-handheld hybrid similar to the Nintendo Switch.

The PC handheld market is indeed small, and is expected to only reach 8 million by the end of 2025. The dominant force in the market is the Steam Deck, but Microsoft could pull more share with an OEM-Xbox PC handheld that packs in a unique UI, value-added services, convenience features, and enough horsepower to support popular games at decent performance targets.

The move by Microsoft would be a way to expand its foothold on software and services across a wider addressable userbase, and also tool Windows to a handheld use-case profile along the way.