EXCLUSIVE: Xbox's new hardware plans begin with a gaming handheld set for later this year, with full next-gen consoles targeting 2027

Here's your first glimpse at Xbox's next-gen hardware plans, and some parts are being executed more quickly than you might think.

The Xbox Series X|S generation has been a bit of an odd one. Microsoft's Xbox console hardware sell-through has declined quarter over quarter for some time, but Xbox's addressable monthly active user base has been skyrocketing — owing to the purchase of Activision-Blizzard. Armed with mobile games like Diablo Immortal, Candy Crush Saga, and Hearthstone, atop core games like Call of Duty, World of Warcraft, and Overwatch, Microsoft's future in gaming is all but guaranteed. What has been a little less clear is Xbox's plans for hardware.

Microsoft has been putting its exclusive console games like Forza Horizon 5 onto PlayStation to help grow the profitability of its business. In the near term, addressing users where they are is far more cost-effective than what Microsoft would need to spend to acquire new Xbox console users potentially. However, the strategy has been questioned for the long term damage it might do to Xbox console hardware. Microsoft appears keen to continue servicing its legacy Xbox audience with new hardware regardless, and over the past few months, I've been working to figure out exactly what that might look like. Here's what I've learned.

First up, Microsoft is working with a PC gaming OEM (think ASUS, Lenovo, MSI, Razer, etc.) on an Xbox-branded gaming handheld, surprisingly slated for later in 2025 if plans are met. Codename "Keenan," this gaming handheld will look unmistakably "Xbox" we're told, complete with an official Xbox guide button, and Xbox design sensibilities. Given that this is a partner device, similar to Lenovo's SteamOS partnership with Valve, I expect this handheld to be more PC-oriented. It'll most likely run full Windows, putting the Microsoft Store and PC Game Pass front and center, alongside the ability to install things like Steam.

This device will likely serve, at least in part, as a research experience for Microsoft. I expect the handheld will test new Windows 11 "device aware" capabilities, while reducing third-party OEM bloatware that are typical of devices like the Lenovo Legion Go and ASUS ROG Ally. I expect Microsoft will leverage widgets on the Xbox Game Bar on PC for controlling things like TDP and fan speed, while hopefully having a more streamlined OS experience for controller use. Of course, existing PC gaming OEMs will benefit from these efforts as well — but the research will also help with Microsoft's further-out plans.

Because indeed, our sources also indicate that Microsoft's internal successor to the Xbox Series X|S platform has been fully greenlit all the way up to CEO Satya Nadella. For now, I understand that Microsoft's next-gen hardware plans include a premium successor to the powerful Xbox Series X, alongside its own Xbox gaming handheld, and several new controller options. Tentatively, these new console devices are slated for 2027.

It seems that the next-gen Xbox consoles will be closer to Windows than ever before, reducing the amount of work developers have to commit to when porting from PC. I understand that they will continue to sport backwards compatibility with legacy Xbox games too, however. Xbox president Sarah Bond previously announced a project team specifically designed to promote backwards and forwards compatibility for existing Xbox games, to that end. Xbox lead Phil Spencer has teased in previous interviews a desire to support third-party storefronts on Xbox hardware too, including platforms like the Epic Game Store, GOG, itch.io, and even Steam itself. There's every reason to presume AI will have a role to play next-gen, as well as Xbox cloud capabilities. Microsoft's new controllers have direct-to-cloud connectivity from what I've been told, and more intelligently allow players to switch them between different devices.

Of course, there are plenty of logistical issues to overcome with regard to some of these plans. Always note that plans might change between now and 2027. Consider this a preview of what could come to pass, as we wait for official reveals from Microsoft itself.

A plurality of devices are on the way for Xbox fans, new and old

Xbox's multi-device future revolves around meeting players exactly where they are, regardless of device, geography, or play style. Its acquisition of Activision-Blizzard accelerated that vision, anchoring Microsoft as a gaming company for the foreseeable future. Microsoft's slate of upcoming Xbox games is stronger than ever, and the possibilities for integrations between Game Pass, Battle.net, cloud, and Microsoft's mobile games also offer tantalizing potential.

Microsoft's strategy has de-emphasized its own Xbox console audience as its main growth vector, however, which has put stressors on the brand. I've argued in previous editorials that Microsoft needs to bring its core audience along for the ride, rather than leave them behind, and its hardware plans seem to be doing exactly that.

By linking Xbox to Windows, Microsoft can cast off the need to build a system that is completely lock-step with PlayStation on features and power. Microsoft could potentially target a more powerful box more in-line with higher-end PCs, giving developers an easier time to optimize their Windows PC versions specifically for the next-gen Xbox console.

Thanks to the Xbox Series S, Microsoft already has a large amount of games that could be more easily ported to a handheld-type system, too. The strong possibility that these future systems will remain backward compatible ensures that those of us who are digitally locked to the Xbox ecosystem will have a place to upgrade to in the future. Future Xbox games will likely be Windows-oriented, hopefully with "Xbox Play Anywhere" as a default licensing model.

Of course, there's still so much we don't know, and can only speculate upon for now. Price, specs, features, developer support, and beyond — are for a future report.

At least for now, Xbox well and truly remains all-in with hardware.