Microsoft triples down on Xbox hardware commitment, while also teasing first-party gaming handhelds — will it actually happen?

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Over the past couple of weeks, Microsoft’s Xbox has been dealing with more hate than usual.

Following a summer of layoffs, Microsoft increased prices on many of its products, like other companies have been doing. However, the price of Xbox Game Pass Ultimate jumped by a surprisingly large 50% – much more than typical price increases due to inflation.

Xbox’s recent and significant changes have worried many players and provided opportunities for critics to attack the platform, making Microsoft vulnerable to false information and negative campaigns.

As an analyst, I can confirm that Microsoft recently clarified its commitment to next-generation Xbox hardware. This came in response to recent rumors circulating on social media and gaming websites which suggested they might be reconsidering their approach.

Microsoft and ASUS have teamed up to release the Xbox Ally, a portable gaming device. However, its Xbox branding has caused some confusion – it doesn’t actually play games designed for Xbox consoles. The Ally is a PC gaming handheld through and through, but it prioritizes Xbox services and features. It does offer access to over 1,000 games available on both Xbox and PC, with cloud saving and a growing library of new titles. Despite this, many people – even those in the gaming press – are still unsure about what the device is and how it works.

Xbox President Sarah Bond recently discussed Microsoft’s plans for gaming hardware in an interview with Variety.

Bond considered the cost of the Xbox Ally ($600) and Xbox Ally X ($1000). He learned that tariffs influenced the pricing, but also that because ASUS isn’t a major console maker like Xbox or PlayStation, it can’t offset the cost with software sales. Companies like Xbox, PlayStation, and Steam Deck can afford to sell their hardware at a lower price because they profit from game sales.

Bond clarified that this product is made by ASUS, and they are the ones who determine the price. Therefore, any sales won’t show up in Microsoft’s financial reports this month. He also highlighted that the collaboration between ASUS and Microsoft is mutually beneficial, combining their strengths. ASUS has a long history in this area, and has arguably been more successful with Windows devices than any other manufacturer.

We explored how to give people a variety of choices, and ASUS was key because they designed the hardware. Their understanding of the market, desired features, and what customers want ultimately determined the devices’ prices.

Bond explained that Xbox and Windows are collaborating more closely than ever to improve gaming, especially on devices like this one. He added that working with ASUS allowed them to significantly enhance the experience and make progress much faster than they could have alone.

Microsoft put its plans for a standalone Xbox handheld – which we reported on earlier this year – on hold to concentrate on working with ASUS. However, sources insist the project hasn’t been cancelled, just temporarily stopped. While most paused projects don’t resurface, Microsoft has brought things back from the brink before, like with the Surface Duo. According to our sources, Microsoft still plans to create its own Xbox handheld in the future.

Here’s Sarah Bond’s answer when asked about Xbox creating its own devices, including handheld consoles.

We’re actively planning for the future of our hardware, and are currently developing our next generation of devices. We’ve been working on designs and prototypes, and our partnership with AMD will play a key role in this. The ASUS ROG Ally presented a chance to explore new ideas and offer gamers more options, alongside our planned hardware upgrades. We’re committed to listening to player and creator feedback, and we’ll continue to innovate based on what they want.

Microsoft is dealing with consumer trust issues

Sarah Bond’s recent statements about Xbox hardware might still worry some customers. Microsoft has a history of quickly abandoning consumer products when they face challenges or competition. Many Microsoft products have been discontinued over the years, often because the company shifts its focus and funding to newer trends, like the current interest in artificial intelligence.

I’ve often criticized Microsoft for focusing too much on immediate results, but it’s clear they’re making significant investments in gaming. They’ve spent billions on Xbox through purchases, have a large and dedicated player base on consoles and PCs who spend a lot of money, and are reaching even more casual gamers on mobile with games like Candy Crush.

While the Xbox handheld doesn’t have every Xbox game, Microsoft has spent a lot of money building the technology to support cloud gaming. This investment is designed to ensure games will continue to work well as devices change and internet gets faster. The handheld is also helping Microsoft test how to make Windows better for TVs and home entertainment – something they’ve been working on for years. With Windows 12, they’re focusing on making Windows more responsive to voice commands and able to handle tasks automatically using AI.

I’ve noticed Xbox and gaming aren’t just a side project for Microsoft – they’re central to everything the company does. While I don’t expect to see fully AI-generated games from them anytime soon, I do think large language models could really help improve things like upscaling resolution, managing save files, and boosting cloud streaming. Best of all, these improvements wouldn’t replace the work of game developers – they’d just help them do their jobs even better.

Xbox’s current approach might be confusing for players, and it’s unclear if it will succeed. However, if they stick with it, it has the potential to really change things up.

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2025-10-20 12:10