Microsoft has reportedly paused development on its Xbox handheld project

The device was expected to share design elements with the Xbox aesthetic and would be a native project. Reports indicated that it would be developed in collaboration with third-party companies like Lenovo, ASUS, or MSI. Additionally, there were speculations that ASUS was leading the effort to bring the Xbox handheld device to fruition, with leaked regulatory images providing a sneak peek at the anticipated device.

Now, a new report has emerged, stating that Microsoft was genuinely working on a natively built Xbox handheld device, which has, for the time being, been put on hold. The company is reportedly redirecting its efforts to improve Windows 11 gaming performance on third-party handhelds, including the one in development by ASUS.

According to Windows Central, insider information suggests that Microsoft is concentrating on the development of ASUS's handheld, known as "Project Kennan." This pivot comes in response to the rising popularity of Valve's SteamOS, as SteamOS handhelds like the Steam Deck are outperforming devices running Windows 11 in terms of power, performance, and efficiency.

ASUS's "Project Kennan" is expected to be released by the end of this year, and most likely, the hardware aspects are already finalized. The focus now lies on refining the software experience, as Microsoft and ASUS aim to provide the best possible Windows 11 gaming experience on portable platforms.

One of the goals is to enhance the functionality of the Xbox app, along with optimizing overall system performance to elevate gaming on handhelds like the ASUS ROG Ally and Lenovo Legion Go.

The positive news? Microsoft hasn’t abandoned its ambition for a native handheld device. Reportedly, the company remains committed to developing its own handheld, but for the moment, it has shifted its attention to supporting third-party hardware development and perfecting it.

The ROG Ally 2 is generating a lot of excitement with its next-gen potential—but if you want premium handheld gaming without delay, the ROG Ally X is available now. As always, for the latest news on hardware launches and industry developments, be sure to follow our dedicated hardware coverage.