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Microsoft hasn’t achieved the market share it initially hoped for with its Xbox consoles, but in the long run, it’s clear the company sees hardware as a secondary pillar in its broader strategy. That doesn’t mean they’re stepping away from devices altogether—quite the opposite.

According to an exclusive report by Jez Corden (Windows Central), Microsoft is preparing to launch an Xbox-branded handheld console in partnership with a PC gaming OEM, such as ASUS, Lenovo, MSI, or Razer. The device is expected to arrive sometime in 2025.

Internally known as Project Kennan, this handheld would be developed by a third-party manufacturer but designed to feel unmistakably “Xbox”—featuring the iconic Xbox guide button and brand-specific design elements. The system would be PC-based, running a custom version of Windows, and heavily integrated with the Xbox PC Store and Game Pass, while also supporting Steam.

In addition, Microsoft’s next-generation console, the successor to Xbox Series X/S, is already in development and has reportedly received the green light from CEO Satya Nadella. The new system is expected to launch in 2027 and will likely be a premium hardware offering, among maybe other options.