Xbox Has Reportedly ‘Sidelined’ Plans For A 2027 First-Party Handheld

For a while now, we’ve been hearing rumours that Xbox will be teaming up with ASUS for a third-party Xbox handheld device later this year, and then building a dedicated first-party Xbox handheld for some point in 2027.

While the ASUS device has been all-but revealed (and is still expected for 2025), the 2027 Xbox handheld has apparently been sidelined internally at Microsoft – according to a new report shared by Windows Central.

The outlet says that the news was announced within the company today, with a mention that priorities are shifting “more deeply” towards focusing on third-party handhelds right now. Here’s an excerpt from the report:

“Microsoft still wants to build its own Xbox handheld in the future, but Microsoft has decided to prioritize its teams to improve Windows 11 gaming performance, specifically for devices like the ASUS partner device ‘Project Kennan’.”

“Our sources have indicated to us that Microsoft is still deeply investing in developing its own Xbox gaming handheld technology in the future…”

As you can see, it sounds like a first-party Xbox handheld isn’t an impossibility by any means going forward, but betting on one for 2027 probably isn’t a good idea. The report suggests that the first-party device seems to have been intended to run “full Xbox games” rather than just relying on Windows PC versions, so that bodes well for whenever it hopefully arrives – but for now, “the shift is about prioritising and allocating resources”.

In terms of the ASUS Xbox handheld for 2025, the hardware is said to be “essentially finished”, but the Xbox and Windows teams are still working hard to optimise the device from a software perspective.

There’s more detail on all of this in the Windows Central report if you’re interested, and we’ll keep our eyes peeled for any further updates on this story. For now though, it sounds like a first-party Xbox handheld in 2027 is a no-go.