If this second handheld system happens, we'd expect it to be more like a 'traditional' Xbox console that supports console games. If the above 2025 system launches and Microsoft continues to work on compatibility for a few years, the team could potentially get existing Xbox console games running on this new device.

Over four years into the current console generation, we’re still seeing game releases, like WWE 2K25 and Like a Dragon: Pirate Yakuza in Hawaii, launching on the PS5 and Xbox Series X|S and the 12-year-olds PS4 and Xbox One.

A new report from Windows Central claims that “Xbox’s new hardware plans begin with a gaming handheld set for later this year, with full next-gen consoles targeting 2027” and that Microsoft is working on a “Project Keenan” handheld in partnership with an unnamed OEM.

A next-generation, full-size Xbox will take another two years, according to anonymous sources, but Microsoft's take on the handheld gaming PC could debut in the coming months.

According to Windows Central, Microsoft is working on a portable Xbox console that could be released by the end of the year to rival the Nintendo Switch 2 as well as other handhelds like the Steam Deck.

The rumor of an Xbox handheld has been floating around for months, but up until now, not much was really known about Microsoft’s launch plans for the hardware. A new report suggests that Microsoft is looking to launch such a handheld in the latter half of 2025.

Microsoft is said to be working on an Xbox handheld console slated for release in 2025, and a full next-gen console could be coming in 2027.