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

Although Microsoft has not officially commented on these reports, its gaming executives have hinted at both devices in various interviews. In January, Jason Ronald, Microsoft's VP of 'Next Generation,' told The Verge that the company aims to integrate Xbox and Windows experiences for PC gaming handhelds developed by original equipment manufacturers (OEMs) like Asus, Lenovo, and Razer. However, Keenan is not linked to a first-party Xbox handheld, which Phil Spencer, Microsoft's gaming boss, suggested is still years away.

Xbox Games Series Tier List

Windows Central also stated that the next-gen Xbox has been fully approved by Microsoft CEO Satya Nadella. This premium successor to the Xbox Series X, along with a first-party Xbox gaming handheld and new controllers, is expected to complete Microsoft's console lineup in 2027. It appears that Microsoft may not plan to release a direct next-gen successor to the less powerful Xbox Series S, possibly intending for the handheld to fill the role of a more affordable, less powerful console.

The next-gen Xbox is anticipated to resemble a PC more than any previous Xbox model, supporting third-party storefronts such as Steam, the Epic Games Store, and GOG, while maintaining continued backwards compatibility. Last year, Xbox president Sarah Bond emphasized Microsoft's commitment to the next generation of hardware, promising "the biggest technological leap ever in a generation."

Amidst speculation about the future of consoles, the Xbox Series X and S are struggling in the 'console war,' while Sony has indicated that the PlayStation 5 is entering the second half of its life cycle. Nintendo is preparing to launch the Switch 2 later this year, raising concerns about the viability of the traditional video game console market. Phil Spencer has noted that the console market has not grown significantly in recent years, with a static customer base increasingly focused on a few major games. Former Xbox executive Peter Moore told IGN last year that Microsoft was likely discussing the future of consoles.

This latest report suggests that Microsoft believes in the future of consoles and is actively working to innovate and expand its hardware offerings.