Report: Microsoft experimenting with Xbox handheld prototypes

Reports indicate that Microsoft is currently experimenting with new handheld gaming prototypes, presumably in an effort to help the hybrid market mature while raking in profits along the way.

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Microsoft may be exploring a new handheld device capable of natively playing Xbox games. The news comes from a recent episode of the Xbox Two podcast where Windows Central's Jez Corden says that Microsoft has new gaming handheld tech in early prototype stages of development.

There's admittedly not a lot to go on. This topic is generally speculative in nature, and Valve's success with the Steam Deck is typically seen as evidence of a potential Xbox handheld. Corden cautions listeners by saying he's still investigating the matter and hasn't issued a report because info is still being gathered.

"You know how a lot of my reporting is based around debunking things? No one's debunked a handheld to me. That fact that no one's debunked it to me suggests that they're exploring it," Corden said.

Microsoft has done its part in the handheld market. Only instead of producing its own hardware, Microsoft instead teamed up with partners like Logitech, ASUS, and Lenovo to bring Xbox services to these platforms.

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An Xbox gaming handheld also fits into my predictions about the future of Microsoft's video games hardware. In that prediction, I outlined that Xbox could fragment its HW base and expand to multiple endpoints including a handheld--one that plays Xbox games, natively, with a built-in SoC powerful enough to sustain gaming experiences without relying exclusively on cloud streaming.

Whether or not Microsoft takes this approach depends on price, LTV (life-time value) of the potential buyers, and market demand. Microsoft has never sold an Xbox console at a profit so this could be a new opportunity to create the company's first profitable gaming console hybrid.