Xbox CEO Asha Sharma is reportedly targeting the 2027 holiday season for a new handheld gaming device. The plan, outlined in a profile published by Fortune, appears to point towards a successor to Asus-made Xbox Ally X hardware, although Microsoft has not resolved which operating system will power it.
The reported handheld would arrive before the next Xbox home console, which is planned for the 2028 holiday season. Both products may form part of Project Helix, described as a broader “family of devices”, but the available details do not confirm whether the handheld and console will launch under that same programme.
Pricing has not been announced. The same reporting suggests that Project Helix Xbox consoles could reach as much as US$1,800 without subsidies, though it is unclear whether that figure has any relevance to the handheld.
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Xbox and Windows remain divided over the handheld’s software
The most significant issue may be taking place inside Microsoft rather than on the device itself. Xbox reportedly wants an operating system designed around gaming, while the Windows team has pushed for a version based on Windows Home.
The disagreement became serious enough that a senior Xbox executive reportedly threatened to abandon the project rather than accept the proposed Windows build. Xbox is now said to be directing most of the operating system’s development, while Sharma has stressed that the two Microsoft divisions still need to work closely together.
This dispute matters because the software experience can determine whether a handheld feels like a games console or a small Windows computer. It also reflects Xbox’s continuing challenge of balancing its own gaming priorities with the requirements of other Microsoft business groups.
Why the operating system matters
The existing Xbox Ally X uses a user interface layer over Windows. That approach offers the flexibility and compatibility associated with Windows, but the interface has been criticised as awkward and inconsistent for handheld play. It is not considered as polished or streamlined as the experience found on devices such as the Steam Deck.
The Ally X still has several advantages, but its Windows-based software can be a major weakness, including in overall game performance. The ongoing internal debate suggests that Microsoft has not completely settled how it will address those problems in a future Xbox handheld.
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