Xbox CEO Asha Sharma has indicated a desire to launch a new handheld gaming device by the 2027 holiday season, according to a profile in Fortune. This potential device would follow the existing Asus-manufactured Xbox Ally X, but its development is reportedly complicated by ongoing disagreements between the Xbox and Windows teams regarding the operating system. The same report suggests a successor to the current Xbox home console could arrive in holiday 2028.
The internal conflict centers on the operating system's foundation. The Xbox team is seeking software optimized specifically for gaming experiences, whereas the Windows team advocates for utilizing a version of Windows Home. Tensions reportedly escalated to the point where a senior Xbox executive threatened to abandon the handheld project if forced to adopt the Windows build. While Xbox currently holds more sway in directing the handheld's OS, Sharma acknowledged the necessity of close collaboration with Microsoft's broader divisions, stating, "We can't build Helix on our own."
This dispute has significant implications for the Xbox handheld's potential. The current Xbox Ally X employs a UI layer over Windows that is described as finicky and less streamlined than the user experience found on devices like the Steam Deck. This Windows-based OS has been cited as a considerable drawback, impacting overall game performance. It appears that this fundamental debate over the operating system's direction and its impact on the handheld's gaming capabilities has not yet been fully resolved within Microsoft.