After years of focusing on consoles and cloud services, Microsoft is preparing to re-enter the handheld gaming space, setting its sights on the dominance of Nintendo’s Switch. Sources close to the company reveal that the tech giant is developing a dedicated Xbox-branded handheld, signaling its renewed ambition to capture a slice of the booming portable gaming market.

A Competitive Market with Big Players

The handheld gaming sector has seen a resurgence, largely driven by the runaway success of Nintendo Switch and newer entrants like Valve’s Steam Deck and ASUS ROG Ally. Microsoft’s re-entry indicates it no longer wants to remain on the sidelines, especially as portable gaming devices are becoming mainstream alternatives to traditional consoles.

Integration with Xbox Ecosystem

Unlike past attempts, Microsoft’s strategy now appears centered around deep integration with its Xbox ecosystem. The handheld is expected to support Xbox Game Pass, cloud streaming, and potentially offline play for select titles. This could give Microsoft a unique edge by allowing gamers to access AAA titles on the go without relying entirely on local hardware performance.

Past Attempts and Lessons Learned

Microsoft had previously experimented with portable gaming concepts, including mobile partnerships and streaming apps, but never fully committed to a handheld console. The resurgence of demand for hybrid gaming experiences seems to have pushed the company to finally pursue a dedicated device.

Potential Impact on the Industry

Analysts suggest Microsoft’s return could heat up competition in the handheld market, forcing Nintendo and other players to accelerate innovation. If successful, the device could blur the lines between home and portable gaming, making the Xbox brand more versatile and future-ready.