Microsoft appears to be throwing the playbook out the window as it enters the mobile gaming arena and seeks new profits in other markets. To be a fly on the wall in recent Microsoft/Xbox decision-making meetings could give some interesting insights into the strategies being planned out. It was recently shared that Microsoft’s console manufacturing and game publishing division had been working on its own Xbox gaming handheld but had also partnered with ASUS to do the same, and then shifted its teams to temporarily pause development of its console to assist ASUS with theirs.
ASUS, a major hardware manufacturer with vast experience in PC components and peripherals, along with its line of mobile hardware, was further along in the development pipeline for its Xbox handheld system which has since made its debut at the Xbox Game Showcase 2025, and now it seems that Microsoft is fully handing over the ball for a hopeful touchdown. According to The Verge, Microsoft has “essentially cancelled” development on its Xbox gaming handheld to focus on the Xbox software platform, which has been undergoing major new changes. This move could, for some, fuel rumors that Microsoft is abandoning console manufacturing altogether, something brought up in recent years and adamantly denied by Xbox boss Phil Spencer, who shared the following in an interview with Rolling Stone last year.
“What it’s grown into now is more accessibility. Xbox isn’t just one device, Xbox is on your smart TV, Xbox is on your PC, Xbox is on your phone, and we’re in the middle of that transition.”
Phil Spencer, Xbox CEO
However, as the expression goes, context is everything. Microsoft has certainly stirred up curiosity among the gaming community on how it intends to compete in a market largely dominated by the Steam Deck, Android devices, and the Nintendo Switch. It now seems that the teams behind Windows 11 and the Xbox OS are tasked with further optimizing and essentially merging the two systems so that they can be used by partners on their devices. Spencer has gone on record in the past to give praise to the Steam Deck, along with Lenovo and ASUS, for their accomplishments in the mobile gaming sector. He’s previously said that while these new (mobile) form factors do a good jod of providing a console-like experience with the Xbox app, and its games, his greatest complaint was how Windows felt while using the devices that support the OS, so it’s no surprise the wheels have been turning in his mind on how to make something better and bridge the gap between PC and mobile.
The new report has added that “We’ll see multiple devices from PC makers like ASUS that will also be considered next-gen Xbox consoles,” so while there’s no immediate new console being talked about it would appear that Microsoft is intent on garnering support from other hardware manufacturers to produce their own Xbox gaming handhelds.
Xbox is betting big and taking gambles with its ideas. From its day one pledge with new releases on Game Pass to its Xbox Play Anywhere feature allowing players to buy a game once on its store but then be able to play it on PC, console, or mobile device, and now this new strategy of getting other manufacturers to produce Xbox-based mobile devices, the console manufcaturer is looking at many ways to shake up the industry and search for new profit streams.