A recent report has shed light on Microsoft's ambitious plans for its video game hardware, revealing that a full next-generation Xbox is slated for release in 2027, with an Xbox-branded gaming handheld expected to launch later in 2025. According to Windows Central, a partner PC gaming handheld, codenamed Keenan, is in development and set to debut in late 2025. Meanwhile, a successor to the Xbox Series X and S is already in "full" production and expected to hit the market in two years.

Although Microsoft has not officially responded to the report, its gaming executives have hinted at these developments in various interviews. In January, Jason Ronald, Microsoft's Vice President of 'Next Generation,' shared with The Verge that the company aims to integrate Xbox and Windows experiences for PC gaming handhelds developed by original equipment manufacturers (OEMs) such as Asus, Lenovo, and Razer. It's important to note that Keenan is not a first-party Xbox handheld, as Phil Spencer, Microsoft's gaming boss, has suggested that a first-party Xbox handheld is still years away.

Xbox Games Series Tier List

Xbox Games Series Tier List

Windows Central also reported that the next-gen Xbox has received full approval from Microsoft CEO Satya Nadella. This premium successor to the Xbox Series X is expected to be part of a broader console ecosystem that includes a first-party Xbox gaming handheld and new controllers, all set to be released in 2027. Interestingly, Microsoft seems to be steering away from a direct next-gen successor to the less powerful Xbox Series S, potentially positioning the upcoming handheld to fill the role of a more affordable and less powerful console option.

The next-gen Xbox is anticipated to resemble a PC more than any previous Xbox model, featuring support for third-party storefronts such as Steam, the Epic Games Store, and GOG. Continued backwards compatibility is expected to be a key feature.

Last year, Xbox president Sarah Bond emphasized Microsoft's commitment to its next-generation hardware, stating that the company is "moving full speed ahead on our next generation hardware, focused on delivering the biggest technological leap ever in a generation."

The future of the console market is a topic of much speculation. The Xbox Series X and S are reportedly struggling in the 'console war,' while Sony has indicated that the PlayStation 5 is entering the second half of its lifecycle. Nintendo is preparing to launch the Switch 2 later this year, amid growing concerns about the viability of traditional video game consoles.

Phil Spencer has acknowledged in interviews that the console market has not seen significant growth recently, with a static customer base largely focused on a few major titles. This has led to discussions about the future of consoles, with former Xbox executive Peter Moore questioning their longevity to IGN last year. However, based on the latest report, it appears that Microsoft remains committed to the console business.