Tom Warren, for The Verge:

The Steam Deck has kickstarted a wave of handhelds from some of the big names in PC gaming. Asus has its Windows-powered ROG Ally, Lenovo just announced its own Legion Go handheld PC, and Logitech released a cloud-focused handheld. AMD has been quietly arming an entire new wave of Steam Deck competitors, and that got me thinking: where’s Microsoft’s Xbox handheld?

Since the debut of the Xbox more than 20 years ago, fans have been clamoring for a portable version. During that time, Sony released the PlayStation Portable (PSP) and the PlayStation Vita, and it now plans to launch a $199.99 PlayStation Portal in November that will stream PS5 games. Microsoft has shown little interest in an Xbox handheld of its own, despite prototyping a seven-inch gaming tablet more than 10 years ago.

Instead, Microsoft has focused on a device-agnostic business model where Xbox players can stream games to phones, tablets, and other devices.

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The Xbox maker had been very close to launching its dedicated Xbox cloud console last year before scrapping its plans just weeks before an announcement. The device, codenamed Project Keystone, was then spotted on Xbox chief Phil Spencer’s shelf in October, confirming that the company had manufactured some units.

Work on Xbox Cloud Gaming has slowed over the past year inside Microsoft, sources tell me. Microsoft previously promised that Xbox Cloud Gaming would support your existing game library by the end of 2022, but that never happened. Microsoft also scrapped plans to launch a dedicated version of Xbox Cloud Gaming that players could subscribe to instead of paying for the Xbox Game Pass Ultimate subscription.

That’s likely all because regulators around the world have been focused on Microsoft’s cloud gaming efforts as part of a review of its proposed Activision Blizzard deal. The UK’s Competition and Markets Authority even blocked the deal citing cloud concerns, and the European Commission shared similar cloud concerns but approved the deal thanks to cloud-related remedies.

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All of this scrutiny about the future of Xbox Cloud Gaming makes it unlikely that we’ll see a cloud-powered Xbox handheld or console anytime soon. But Microsoft is also well placed to create its own Steam Deck rival that’s powered by Windows and provides access to PC Game Pass, Steam, and other key launchers. After all, cloud devices don’t beat playing PC games on the go where there’s no internet connection required.

Asus’ ROG Ally is emerging as the go-to device for PC Game Pass on portables. Spencer is a fan of the ROG Ally, describing the handheld as his “Xbox on the go” in a recent interview with Eurogamer. He also downplayed the idea of Microsoft making its own Xbox handheld in that same interview. “I don’t need people to buy a piece of hardware from us specifically to go play,” said Spencer. “The ROG Ally is an amazing Xbox experience, even though we didn’t build the device. And I think that’s totally fine.”

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I truly hope Microsoft is seriously working on improving the experience of Windows-based handhelds. Otherwise, we’re in for years of hacked-together projects from OEMs that never really work that well. Valve put a lot of effort into the underlying SteamOS that powers the Steam Deck so that you don’t have to navigate around a desktop Linux environment to get to your favorite games. Windows deserves something similar.

With analyst estimates of the Steam Deck hitting 3 million sales this year, Linux overtaking macOS on Steam, and rumors of a Nintendo Switch 2 on the horizon, PC gaming handhelds look set to grow beyond their initial niche of the past decade. Microsoft is fully aware that these handhelds are growing in popularity and that it has to do something. “I don’t think those are going to be niche devices - those are going to reach scale,” said Spencer in the Eurogamer interview.

If Xbox Cloud Gaming is at a potential standstill, Microsoft may well need to invest more into the Windows side, particularly as there’s more potential for PC Game Pass growth rather than console right now. We might not get the Xbox handheld that people have been demanding for years now, but if Microsoft can give the ROG Ally and other Windows-powered handhelds a more Xbox-like user experience, then we could have an army of Xbox handhelds on the way.

I've enjoyed both the Steamdeck and the ROG Ally, the Logitech G Console is interesting as well though the ROG Ally running on windows rather than Android puts the ROG Ally over the G Console, I've also found when using xbox cloud gaming that the ROG Ally handles it so much smoother and faster than the G Console, which makes sense when you compare the specs between the two devices.

Between the Steamdeck and ROG Ally though... I prefer the Steamdeck but it's a very close edge over the ROG Ally, so close that I do have to stop and think between which I want to take.

But I agree, when is Microsoft's own handheld? And the surface Duo using xbox cloud gaming does not count.