
Image Courtesy Of: Windows Central
https://www.windowscentral.com/gaming/xbox/xbox-hardware-report-project-keenan-next-gen-xbox-2027
Microsoft has reportedly paused or significantly pulled back development on its own first-party Xbox handheld gaming device. This strategic shift is said to allow the company to instead focus its efforts on supporting and optimising the Xbox experience for third-party portable gaming devices, such as the ASUS ROG Ally and Lenovo Legion Go.
A key aspect of this revised strategy involves improving the performance of Windows 11 on these existing and future portable hardware platforms. While a dedicated first-party handheld is seemingly sidelined for now, reports suggest Microsoft’s broader hardware plans include a next-generation Xbox console, potentially codenamed “Project Keenan,” aimed for a 2027 release. This indicates a focus on enhancing the overall Xbox ecosystem through software and partnerships, rather than developing proprietary portable hardware at this time.

My Opinion: I think Microsoft looked at Steam OS and thought, “Our Windows 11 release on a handheld is going to get destroyed in most metrics that matter”.
They need to fix Windows 11 first. The solution seems simple enough, but it will take time and money. They need to make a new version of Windows that is similar to Linux. A simple Kernel above the hardware layer that all applications can be stacked on top of. From there, build compartmentalised services/applications that can then be bolted onto the system as necessary. These applications need to be as barebones as possible and have very little interlinking, this should remove the number of micro services that link back to the kernel and hardware, thus reducing overall latency and background processes.
Get a working version of Windows 11 without the UI, this might, terminal only. Get a working Windows Lite version that has only the core services and a browser that uses no more than about 2GB of RAM, and build the gaming Operating System on this base.
For example, the generic Windows Operating System can be the big fat boy. The Xbox handheld needs to be stripped down to only include the GUI and gaming services. The ARM devices should be more or less the same as the Xbox handhelds, but maybe with a richer feature set.
These are simply my opinions, loosely described.
Written By: Ron @ RonsTechHub