Rumors suggest Microsoft is developing a portable Xbox gaming console with cutting-edge hardware and seamless ecosystem integration.

Microsoft is reportedly working with third-party OEMs to make an Xbox-branded PC gaming handheld, but it won't be a PS Vita-like Xbox console handheld.

Microsoft is prepping a new handheld version of its Xbox console that could be launched later this year. Meanwhile, plans are afoot to replace the existing Xbox Series S and X consoles in 2027.

According to a new report, Microsoft will partner will a gaming PC manufacturer on the first official Xbox handheld console this year.

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.