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Report claims Microsoft prototyped a handheld Xbox cloud gaming device in the past

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With devices like Valve’s Steam Deck selling well, and major PC makers launching Windows 11-based portable gaming PCs this year like the ASUS Rog Ally and the upcoming Lenovo Legion Go, many people are wondering if Microsoft would launch its own similar device. A new report claims that the company did work on a similar product in the past, but decided not to move forward with it.

The Verge reports, via unnamed sources, a few details about this Xbox cloud gaming handheld:

Sources familiar with Microsoft’s Xbox plans tell me the company was prototyping a cloud-focused Xbox handheld previously. Microsoft has developed a lightweight version of the Xbox user interface that can run on handheld devices, dedicated cloud consoles, and TVs. While we’ve seen this interface appear on some Samsung TVs, the dedicated Xbox cloud console that Microsoft first announced in 2021 was canceled as Microsoft pivoted toward the TV streaming app instead.

The article didn’t offer any details on when this Xbox cloud gaming handheld was in development, nor when the company decided to end the project. In 2021, Microsoft did confirm that it was working on a streaming stick-like device that could connect to a TV which could support cloud gaming, However, in 2022, the company said it was going to “pivot away from the current iteration” of the product, which had the internal code name Keystone.

Since then, Microsoft has not made any announcements about creating a handheld gaming PC or a cloud-streaming game device. Part of the reason is that its cloud gaming services have been a major concern for some government regulators, such as the UK’s Competition and Markets Authority.

The CMA blocked Microsoft’s plans to acquire Activision Blizzard in April because it felt that it could use Activision Blizzard’s games to expand its cloud gaming library and squeeze out competitors. Microsoft has since sent over a modified acquisition plan to the CMA that gives all Activision Blizzard cloud gaming rights to Ubisoft for 15 years.

It’s very possible that, in lieu of a Microsoft-created handheld gaming PC, the company could continue to assist third parties like ASUS and Lenovo to make their own. Whether or not this business plan will be embraced by PC gamers remains to be seen.

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