Microsoft has quietly canceled its own Xbox handheld gaming device after chip maker AMD demanded a commitment to sell at least 10 million units, according to a new report from a trusted industry insider. The project, which was still in early stages, aimed to create a dedicated portable console for Xbox games but was scrapped due to the high sales risk in a market where similar devices have sold far fewer copies.
The details come from KeplerL2, a hardware expert known for accurate leaks on gaming tech, who shared the information on the NeoGAF forums. AMD reportedly wanted the large order to justify building a custom chip for the handheld, similar to what Nintendo does with its Switch. But Microsoft, looking at sales figures for other portables, decided against it.
The Steam Deck has sold around 5 million units since 2022, while devices like the Asus ROG Ally and Lenovo Legion Go have moved only 1 to 2 million each. With those numbers in mind, Microsoft saw committing to 10 million as too risky, especially early in the device’s development.
Instead of building its own handheld, Microsoft is focusing on partnerships. It recently teamed up with Asus to release the ROG Xbox Ally and Xbox Ally X, versions of the ROG Ally handheld branded for Xbox with built-in Game Pass support.
These devices launch on October 16 and let players enjoy Xbox games on the go without Microsoft handling production or sales risks.
The collaboration allows Microsoft to dip into the portable market through existing hardware, similar to how it works with cloud gaming on phones and tablets.
The canceled project wasn’t a Windows-based portable PC like the Steam Deck but a true console focused on Xbox games, more like the Nintendo Switch. Rumors of the handheld surfaced earlier this year, with some expecting it as part of Xbox’s next-gen plans for 2026.
But with AMD’s demand, Microsoft shifted gears, prioritizing safer bets amid a tough hardware market. KeplerL2 noted the decision happened early, so no major resources were wasted.
This news fits Microsoft’s broader strategy of expanding Xbox beyond traditional consoles, especially as rivals like Sony and Nintendo dominate portables. The ROG Xbox Ally arrives soon, giving fans a taste of handheld Xbox play. For now, the dream of a custom Xbox handheld stays on the shelf—perhaps for another day.
