Microsoft is once again making waves in the gaming industry with its upcoming next-gen Xbox console and a powerful gaming handheld, expected to launch in 2025. With Xbox’s recent focus on multi-platform gaming, cloud capabilities, and expanding the Game Pass ecosystem, the future of Xbox looks more promising than ever.
In this article, we’ll discuss everything we know about Microsoft’s next-gen console, their partnership for a gaming handheld, and how they plan to dominate the gaming space by 2027.
Xbox’s Growing Influence Beyond Consoles
The current generation of Xbox Series X|S has experienced a decline in hardware sales. However, Microsoft’s overall user engagement has skyrocketed, mainly due to their acquisition of Activision-Blizzard, which brought in popular mobile games like Diablo Immortal, Candy Crush Saga, Hearthstone, and more. This shift has allowed Microsoft to focus more on expanding its gaming presence across various platforms, rather than solely relying on console hardware.
By introducing their exclusive games like Forza Horizon 5 on PlayStation, Microsoft has found a way to boost profitability by reaching a larger audience without being limited to Xbox hardware.
However, the question remains — what is the future of Xbox consoles?
A New Xbox Gaming Handheld Is Coming in 2025
According to reliable sources, Microsoft is partnering with a major PC gaming OEM (like ASUS, Lenovo, Razer, or MSI) to develop an Xbox-branded gaming handheld. Codenamed “Keenan”, the device is set to launch in late 2025 if everything goes as planned.
Key Features of Xbox Handheld
The gaming handheld will:
- Feature a dedicated Xbox Guide button and official Xbox design.
- Run on full Windows 11, allowing users to install Steam, Epic Games, and other launchers.
- Provide seamless access to the Microsoft Store, PC Game Pass, and Xbox Cloud Gaming.
- Have optimized hardware and software tailored for portable gaming.
This device will compete directly with popular handheld gaming PCs like Steam Deck, ASUS ROG Ally, and Lenovo Legion Go. However, Microsoft plans to eliminate the bloatware found on traditional Windows-based handhelds, making the experience much smoother.
Moreover, Microsoft is expected to integrate Xbox Game Bar controls for TDP, fan speed, and performance management to optimize gameplay on the handheld.
Why Is Microsoft Making a Handheld Gaming Device?
The primary reason behind this move is to reduce dependency on traditional Xbox consoles and expand their ecosystem. Since many users already own powerful gaming PCs, Microsoft sees an opportunity to capture the handheld gaming market and further boost Game Pass subscriptions.
Additionally, Microsoft’s future plan is to create an ecosystem where you can seamlessly switch between devices (Xbox, PC, Handheld) while enjoying the same gaming experience.
This strategic move also allows Microsoft to gather feedback and research for its future Xbox consoles.
Next-Gen Xbox Console Coming in 2027
While Microsoft is working on its gaming handheld, the company has also greenlit the development of the next-generation Xbox console, which is expected to launch in 2027. This console will be the direct successor to the powerful Xbox Series X and will bring major hardware upgrades.
What to Expect from Next-Gen Xbox
Here’s what we know so far:
- Enhanced Backward Compatibility: The next-gen Xbox will support backward compatibility for all existing Xbox games, ensuring a seamless transition.
- Closer to Windows Ecosystem: Microsoft plans to align the next-gen Xbox closer to Windows PCs, allowing developers to optimize games more easily.
- AI Integration: The next-gen console will likely have advanced AI capabilities for gaming enhancements and cloud streaming optimization.
- Direct-to-Cloud Controllers: The new Xbox controllers will have direct cloud connectivity, allowing users to instantly switch between devices without traditional pairing.
- Third-Party Storefront Support: Microsoft has already hinted at allowing third-party stores like Steam, Epic Games, and GOG on future Xbox consoles.
The aim is to make the next-gen Xbox feel more like a powerful gaming PC rather than a closed-console ecosystem.
Why Is Microsoft Shifting Away From Traditional Consoles?
Microsoft’s acquisition of Activision-Blizzard has given them immense leverage in the gaming industry. With a massive library of mobile, console, and PC games under their belt, their new goal is to expand their reach instead of restricting users to the Xbox console.
By creating a multi-platform ecosystem that includes consoles, handhelds, cloud gaming, and PC, Microsoft aims to dominate the gaming space.
Moreover, the declining hardware sales of Xbox Series X|S have forced Microsoft to shift its primary focus from hardware to software and services like Game Pass, Cloud Gaming, and Windows gaming.
What Can We Expect from Xbox in the Next 5 Years?
By 2027, Microsoft’s gaming ecosystem will likely look entirely different. Here’s what you can expect:
- More Xbox Games on PlayStation and Nintendo Switch – Microsoft will continue to break platform exclusivity and bring their games to other consoles.
- A Powerful Next-Gen Xbox Console – The upcoming Xbox successor will offer high-end performance, AI capabilities, and enhanced backward compatibility.
- Xbox Handheld Dominating the Market – If Microsoft’s handheld device succeeds, it could become a direct competitor to Steam Deck and Nintendo Switch.
- Cloud Gaming Integration – Cloud gaming will play a major role in the future of Xbox, making it easier to play AAA titles on low-end devices.
- Reduced Dependency on Xbox Consoles – Microsoft’s primary revenue will shift from hardware sales to Game Pass and cloud gaming subscriptions.
Final Thoughts
Microsoft’s bold move to diversify its gaming hardware and expand its ecosystem is a clear indicator that they are no longer solely dependent on Xbox console sales. The upcoming Xbox-branded handheld and next-gen console are part of a grander strategy to dominate the gaming market by offering accessibility, performance, and cross-platform compatibility.
The future of Xbox is heading towards a multi-platform, multi-device ecosystem, allowing gamers to play their favorite games regardless of the device they own. With major titles like Call of Duty, Diablo, World of Warcraft, and Forza already part of Microsoft’s gaming universe, the company is positioned to lead the gaming industry by 2027.
Stay tuned as we bring you more updates on Microsoft’s upcoming gaming hardware and next-gen console plans!
Don’t forget to checkout our PS5 Best Settings: 5 Features to Turn Off Now (And Why You Should), Top 5 Silent Gaming Keyboards – Best Picks for Late-Night Gamers, How to Choose the Perfect Gaming Monitor for Your Setup in 2025 for more fun gaming.
