The handheld gaming market is booming, with products ranging from the Steam Deck to the Analogue Pocket offering diverse ways to game on the go. Many of the biggest names in the gaming industry have released a gaming handheld, including Valve, Asus, Lenovo, and MSI. For now, Microsoft is on the outside looking in, but it might not be that way for long. In a recent interview with Polygon at this year's Game Developers Conference, Xbox chief Phil Spencer described how the company might be able to improve on current PC gaming handheld offerings. While nothing is confirmed yet, Spencer's comments reveal that leadership at Xbox is seriously exploring the handheld form factor.

I'm already looking forward to an Xbox gaming handheld's release, because this hypothetical product would massively shake up the gaming handheld market. Microsoft seems especially poised to succeed in the handheld form factor in areas where others have failed, in part due to its Xbox and Windows software. Leveraging the Xbox ecosystem, it's possible that Microsoft could offer the strongest game compatibility and support of any handheld. Most importantly, all of these software improvements will have the chance to trickle down to other PC gaming handhelds. Whether you're an Xbox fan, PC gamer, or Steam Deck enthusiast, there's a reason to look forward to Microsoft entering the handheld market.

3 Great hardware and software integration

Microsoft knows what's wrong with PC gaming handhelds and can fix it

Xbox consoles today run great software and have superb optimization because Microsoft has control over the devices' hardware and software. Microsoft designs the consoles' hardware, choosing what components to put inside them. More importantly, it exerts control over the Xbox software, since it is just a highly-customized version of Windows 10. If you took the Xbox software and threw it on a random gaming PC, it probably wouldn't run as well. That's because Microsoft develops Xbox software in a way that makes the most of its console hardware. There isn't a company that has an equal level of control over a PC gaming handheld today. The closest is Valve, which develops SteamOS for the Steam Deck, but SteamOS is a Linux distribution rather than a fully-custom OS.

Gaming handhelds are worse off due to how poorly Windows runs on small touchscreen devices, and this is something Spencer acknowledges in the Polygon interview:

I like the fact that Valve, Lenovo, and Asus went out and innovated in a new form factor. And I will say that when I’m playing on those devices, it almost feels more like a console than a PC — nine times out of 10. The things that usually frustrate me are more Windows-based than device-based. Which is an area I feel some ownership of. Like, I want to be able to log in with a controller. I’ve got my list of things we should go do.

Microsoft could create a handheld that features great hardware and excellent software using its experience with Xbox and Windows. However, it's another thing altogether for the company to actually go out and do it. Spencer's clear acknowledgment of the issues that plague current PC gaming handhelds — and understanding that Microsoft is the company in a position to solve them — is a reason to be hopeful for an Xbox gaming handheld.

2 Better game compatibility

Leverage the Xbox ecosystem for game compatibility and sync

Right now, one of the biggest unknowns about an Xbox handheld is whether it would be built on a closed or open platform. Though there are some exceptions, the Xbox ecosystem is generally a closed platform. You purchase and download games from Microsoft, either through a disk, individual download, or a subscription like Xbox Game Pass. PC gaming handhelds today are basically complete gaming laptops in a different form factor, meaning they can run games purchased from various sources. Microsoft could consider a rumored Xbox handheld an extension of the Xbox ecosystem. Or, it could make it more open, like Windows and other PC gaming handhelds.

Either way, game compatibility would be better than existing options. All the current PC gaming handhelds available today are in some way limited in what games they can run, and how well they can run them. For example, as a Linux-based system, the Steam Deck is incompatible with anti-cheat software required to run high-profile games like Fortnite. Windows-based gaming handhelds don't have that problem, but they are still using physical controllers to run games that might not have been optimized for controller input. Microsoft, using the Xbox ecosystem, could improve on both fronts. The Xbox platform has great support for a wide variety of gaming titles, and they are all developed for controller-first input.

For those hoping that an Xbox gaming handheld would feature a more open platform, there is still reason to hope for one. Microsoft has consistently made moves to expand its reach in the gaming market beyond just Xbox console owners. Games are dropping their exclusivity in favor of cross-platform support, and services such as Xbox Game Pass and Xbox Cloud Gaming are available nearly everywhere. Plus, Spencer's public comments indicate that Microsoft may be exploring an open Xbox gaming handheld concept:

From a game creator standpoint, I can then go build a single version of my game that spans more hardware and reaches more customers. And I would say for players, it reduces the friction. Like, if I want to go play my console games on the go with a handheld, I don’t want to only be able to buy one brand of handheld. Right? […] I want everything that we’re doing in the hardware space to be great. But if somebody chooses to go play today [somewhere else], I don’t want them to feel like a lesser Xbox [player].

Again, it's worth remembering that Microsoft is clearly exploring a variety of different options. However, the idea Spencer describes in his most recent interview appears to reference a more open concept than a closed ecosystem.

1 If Xbox makes a handheld, the entire market wins

Improvements and software features could trickle down to other PC gaming handhelds

The biggest reason to look forward to an Xbox gaming handheld is that the entire market could benefit from Microsoft's entry. The company's development of software designed and optimized for gaming handhelds could extend to all Windows-based PC gaming handhelds. For example, in October 2024, Microsoft rolled out an update to the Xbox app for Windows that made the Xbox Game Bar perform better on handhelds. With greater stakes in the game — like an Xbox gaming handheld of its own — Microsoft would have more incentive to make the Windows and Xbox experience better on all handhelds. In fact, Spencer describes how he wished his Lenovo Legion Go was more like an Xbox in the Polygon interview:

I want my Lenovo Legion Go to feel like an Xbox. I brought [the Legion Go] with me to GDC. I’m on the airplane and I have this list of everything that makes it not feel like an Xbox. Forget about the brand. More like: Are all of my games there? Do all my games show up with the save [files] that I want? I’ll tell you one [game] that doesn’t right now — it’s driving me crazy — is Fallout 76. It doesn’t have cross-save. [...] I want to be able to boot into the Xbox app in a full screen, but in a compact mode. And all of my social [experience] is there. Like I want it to feel like the dash of my Xbox when I turn on the television. [Except I want it] on those devices.

I own an Asus ROG Ally, and I'm a huge fan of the hardware. It's the software that could be improved, since the ROG Ally runs Windows 11. Microsoft shipping an Xbox handheld could make the experience of using a device like the Legion Go or ROG Ally better, and gamers wouldn't have to buy a new device. Time and time again, reviewers and gamers alike have cited Windows as the reason why PC gaming handhelds aren't perfect. Microsoft is the company in the unique position to fix that, and I think it starts with an Xbox gaming handheld.

What would an Xbox gaming handheld look like?

Breaking down Spencer's thoughts about gaming handhelds, there's no clear explanation of how Xbox will fit in. However, it's apparent that the Xbox chief is aware of the ways that Microsoft could make gaming handhelds better, with both hardware and software. I'm still skeptical that Xbox will enter a new hardware category at a time when it is definitively losing the console wars to Sony and Nintendo. The great thing is that Microsoft doesn't need to create a new piece of hardware to make its presence felt in the handheld market. Improving software for Xbox and Windows, working with OEMs of PC gaming handhelds, and optimizing the experience could still make the idea of an "Xbox gaming handheld" a reality.