According to the latest information received from Windows Central's Jez Corden, it would seem that Microsoft has for now shelved plans to create a first party portable Xbox (not to be confused with Asus ' upcoming device), to focus on improving performance in Windows 11 mobile gaming.

This decision would seem to be influenced by the great performance inferiority of Windows 11 portable devices compared to those equipped with SteamOS; according to several benchmarks, Valve's OS offers a much superior gaming experience. Microsoft would therefore have recognized the need to enhance its operating system for these platforms. "Project Kennan", the device resulting from the partnership with ASUS, remains confirmed and scheduled for a launch by the end of the year, with hardware now defined and which could be among the first to mount the AMD Z2 Extreme chip. To be temporarily shelved, therefore, is the portable Xbox console developed internally by Microsoft, a device that, according to Corden's sources, was supposed to natively run Xbox games.

Despite this momentary overshadowing of the first-party handheld project, Corden reassures that the development of the successor to Xbox Series X is proceeding at full speed and is not affected by these changes. The choice to prioritize the improvement of Windows 11 for portable devices from OEM partners such as ASUS is seen as a strategic move to better allocate current resources, without this resulting in staff reductions. The goal is to make the user experience smoother on machines such as ASUS ROG Ally and Lenovo Legion Go, which already use Windows 11, improving integration with the Xbox ecosystem.

Corden also explains that, in parallel, Microsoft would be testing new infrastructures for Xbox Cloud Gaming internally, with the intention of reducing latency and competing more effectively with services such as NVIDIA's GeForce Now. In the past, another cloud-focused hardware project, codenamed "Hobart," had also been canceled.

The upcoming Xbox Showcase on June 8, 2025 will be dedicated mainly to gaming, but these recent rumors on the hardware front outline an evolving picture for Microsoft's future strategies in gaming. The company, while boasting a catalog of top-notch content with Xbox Game Pass, finds itself having to navigate an increasingly competitive hardware market, with the rise of SteamOS and the arrival of new future consoles, Nintendo Switch 2 in the first place.