Microsoft is going all in on its gaming future with ambitious new hardware plans. The company will even try its luck to penetrate the handheld gaming market with a reported surprise set for 2027.
From a handheld Xbox to an ultra-powerful next-gen console, the video game company has tons of exciting updates for console users.
Xbox's Future Hardware Strategy: A Multi-Device Approach
The Xbox Series X|S era has been remarkable, with declining console sales but record monthly active users due to the acquisition of Activision Blizzard by Microsoft. Titles such as "Call of Duty" and "World of Warcraft" have positioned Microsoft's place on top of the gaming world.
But Xbox hardware in the future? While Microsoft has opened up its games to other devices such as PlayStation, it's not ditching its hardcore Xbox base. Rather, it's going multi-device, according to Polygon.
Xbox Handheld Console: Codename 'Keenan'
Microsoft is said to be working on an Xbox-licensed gaming handheld, codenamed "Keenan," alongside a large PC gaming hardware vendor such as ASUS, Lenovo, or MSI.
The console should be released in late 2025 and will reportedly feel "very Xbox," complete with an actual Xbox guide button and distinctive aesthetic. But unlike Nintendo Switch or PlayStation Portal, this console will probably be more PC-focused, supporting full Windows and putting PC Game Pass, the Microsoft Store, and possibly Steam first.
According to Windows Central, the handheld might serve as a laboratory for new Windows 11 optimizations that remove third-party bloatware and add an Xbox Game Bar for improved gaming controls such as power management and fan speed control.
Next-Gen Xbox Console Confirmed for 2027
Microsoft has gone all in on its next-gen Xbox console plans, targeting a 2027 release window. Few details are out at present, but this is what we do know so far.
A Premium Xbox Console: An upgrade to the Xbox Series X, set to bring hardware power further into high-end gaming PC territory.
Native Windows Compatibility: This might pave the way for smoother PC game ports and third-party storefront support like Epic Games Store, GOG, and even Steam.
Backward Compatibility: Microsoft has already established a special team to make sure legacy Xbox games play perfectly on the next generation of consoles.
AI & Cloud Improvements: AI-enhanced gaming optimizations and enhanced Xbox Cloud Gaming integration.
New Controllers with Direct-to-Cloud Support: Microsoft is also working on new controller tech, allowing users to more easily transition between devices.
Xbox's Future is More Than Just Consoles
Xbox's approach is shifting from merely competing with PlayStation. Rather than competing only on console sales, Microsoft is framing Xbox as an ecosystem—across consoles, PCs, handhelds, and cloud gaming.
The addition of a portable device supports Microsoft's "play anywhere" vision, where Xbox gamers have access to their games irrespective of the hardware.
Further, through tighter Windows-Xbox integration, Microsoft minimizes the cost of development for game developers, thereby allowing them to easily optimize across both platforms.
The Challenge Behind Xbox Hardware Plans
While Microsoft's hardware vision for the future is ambitious, it is also accompanied by potential challenges.
The first challenge is if Xbox can keep pace with PlayStation. Given Sony is already an established name in the console business, Microsoft needs to rethink its plans so that gamers won't be left behind in Xbox handheld or next-gen consoles.
Another thing is the pricing for the hardware. Top-shelf hardware commands top-shelf prices, but will Microsoft be able to make its consoles accessible?
More importantly, Microsoft should also consider whether the developers can adopt Windows-based console gaming. An increasingly PC-like Xbox would be game-changing but it will depend on the support of developers.
