Microsoft has reportedly teamed up with an unspecified PC gaming OEM to develop a handheld console with Xbox branding.

The Asus ROG Ally, along with its premium sibling, the Asus ROG Ally X, stand among the best handheld gaming consoles you can get, so Microsoft would do well to partner up with the company for a new handheld device — especially if it comes with an all-new OS platform that caters to Xbox.

Those rumors about Microsoft making it own Xbox handheld may have been hasty, but we could see the Xbox version of SteamOS instead.

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.