Microsoft’s Next-Gen Xbox Set for 2027, Handheld Launch in 2025
A new report has surfaced detailing Microsoft’s ambitious plans for future gaming hardware, indicating that a fully next-generation Xbox console is slated for 2027, while an Xbox-branded gaming handheld could be arriving as early as late 2025. According to Windows Central, Microsoft is actively developing these devices as part of its long-term strategy to reshape the gaming landscape.
The report highlights a handheld gaming device currently under development, codenamed “Keenan,” which is expected to launch in late 2025. This handheld is reportedly a partner PC gaming device rather than a first-party Xbox handheld, meaning it will be produced in collaboration with existing original equipment manufacturers (OEMs) such as Asus, Lenovo, and Razer. This aligns with Microsoft’s broader vision of integrating Xbox and Windows gaming experiences on portable gaming systems made by third-party manufacturers.
In addition to the handheld, the next-generation Xbox console is said to be in full-scale production, with a planned release two years later in 2027. Windows Central claims that Microsoft CEO Satya Nadella has officially given the green light for the new console, which is described as a premium successor to the Xbox Series X. Notably, there appears to be no direct replacement for the less powerful Xbox Series S, leading to speculation that Microsoft’s forthcoming handheld may serve as a more affordable gaming alternative.
While Microsoft has yet to make an official statement on these reports, company executives have hinted at the development of both products in various public interviews. In January 2025, Jason Ronald, Microsoft’s Vice President of Next-Generation Gaming, discussed the company’s intentions to bridge the Xbox and Windows ecosystems for PC gaming handhelds. This suggests that Microsoft is looking to expand its gaming reach beyond traditional consoles by fostering compatibility with existing PC gaming hardware.
Meanwhile, Xbox head Phil Spencer has been more reserved about the potential for a dedicated first-party Xbox handheld. During recent discussions, Spencer suggested that such a device was still several years away, reinforcing the notion that Keenan is not intended to be a proprietary Xbox-branded handheld but rather a partner device aimed at complementing Microsoft’s gaming ecosystem.
The next-generation Xbox, on the other hand, is expected to introduce a significant technological leap. Windows Central reports that it will closely resemble a PC in its architecture and functionality, further blurring the line between console and personal computer gaming. One of the standout features of this upcoming console is its anticipated support for third-party digital storefronts, including Steam, the Epic Games Store, and GOG. This shift would mark a departure from traditional console exclusivity and provide users with greater flexibility in choosing where to purchase their games.
Microsoft has long emphasized backward compatibility as a key feature of its gaming hardware, and the next-gen Xbox is expected to continue this trend. By maintaining access to past Xbox titles, Microsoft ensures that its existing gaming library remains accessible to players on future consoles.
Sarah Bond, the President of Xbox, previously stated that Microsoft is “moving full speed ahead on our next-generation hardware, focused on delivering the biggest technological leap ever in a generation.” This statement underscores Microsoft’s commitment to innovation and reinforces speculation that the 2027 Xbox release will introduce substantial improvements in performance and user experience.
Beyond Microsoft’s own console plans, the broader gaming industry is facing a period of uncertainty. The current console generation, including the Xbox Series X and S, has struggled to achieve significant growth. While Sony has suggested that the PlayStation 5 is entering the latter half of its lifecycle, and Nintendo is expected to release the Switch 2 later this year, questions remain about the long-term viability of traditional gaming consoles.
Phil Spencer has acknowledged these challenges, pointing out that the console market has struggled to expand in recent years. He has noted that the industry now caters to a largely static customer base that primarily plays a select number of major titles. As a result, it has become increasingly difficult for new games and hardware to gain traction. This sentiment echoes comments made by former Xbox executive Peter Moore, who previously suggested that Microsoft has likely debated whether gaming consoles will remain relevant in the future.
Despite these uncertainties, Microsoft appears to be pushing forward with a bold vision for gaming. If the reports prove accurate, the company is poised to reshape its hardware strategy by introducing a more PC-like Xbox console, promoting third-party handheld gaming devices, and expanding its digital distribution partnerships. With a next-generation console slated for 2027 and an Xbox-branded handheld potentially arriving as soon as late 2025, Microsoft’s plans could redefine the gaming experience for years to come.
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