Rumor: Xbox Has Set Aside Their Internal Gaming Handheld In Favor Of Partners Like ASUS

It looks like Microsoft has decided that discretion is the better half of valor.

As reported by Jez Corden for Windows Central, the company has decided to step back from their portable gaming plans. We know that they are partnering with ASUS for an upcoming Xbox branded portable, codenamed Kennan.

Corden claims that Microsoft is pushing back their plans to make their own internal Xbox handheld. Originally, we understood that Microsoft would be working with their OEM partners for Xbox portables, before releasing their own. Now, our understanding is that this portable is no longer in development.

That doesn’t mean that they have abandoned the idea completely. Instead, they’re focusing their efforts to work with ASUS on Kennan, and they may also have other OEM partners who are also making Xbox branded portables.

The timing for this rumor is certainly interesting. It’s possible that Corden heard about this weeks or months ago, and only took today to report it. But we are now a week away from the launch of Nintendo’s next portable console, the Switch 2.

Microsoft may have seen the consumer reaction to the Switch 2 and come to the conclusion that Nintendo’s platform will be a serious contender. While one could argue that the Switch and Switch 2 will open up a bigger market for gaming handhelds, Microsoft’s calculation is that Nintendo will still be stiff competition.

As of February of this year, 6 million PC gaming handhelds have shipped around the world, with 3 to 4 million of them being Steam Decks. As of this writing, Nintendo claims on their website that they have sold 152.12 million Switch units. So while Microsoft has yet to comment on this, it’s absolutely credible that this was their line of thinking.

But if you think about it, Microsoft is in an especially privileged position when it comes to portable gaming. While there’s a lot of buzz around Valve opening up SteamOS to non-Steam Deck PC handhelds, you know that OEMs will continue to sell Windows based PC handhelds. Even if Windows usability and optimization for these handhelds are poor compared to SteamOS, Windows simply has the home advantage of being the base PC platform.

Microsoft also has a relationship advantage with their OEMs over Valve when it comes to PC gaming handhelds. They don’t even particularly need to do extra outreach to what they already do to ship ASUS and Lenovo Windows based laptops and desktops.

As you know, there are rumors that Sony is also working on a gaming handheld of their own. Sony can’t afford to just wait it out the way Microsoft can. We can already expect they’ll be making their own handheld on their own, since their PlayStation Store and Account systems have to be protected and can’t be shared with multiple OEM partners. Sony’s handheld will have to compete with Nintendo, and while many things have changed, their track record against their rival isn’t necessarily dominating.

Microsoft can help OEMs ship all their Windows handheld out first, release their other 10^th generation hardware, and also wait out a potential Steam Deck 2. And then they can take what they’ve learned from all their competitors and partners to make a superior Xbox handheld. They can also afford to drop the idea if they see things won’t work out. While that won’t be as exciting for us consumers, they’ll be saving a lot of money and effort in the process.

So Microsoft really does hold the cards in this situation, and they can choose to hold for far longer than the other players in this market.