Let’s be honest: We were all quite surprised when Microsoft revealed the ROG Xbox Ally at Xbox Games Showcase 2025. Handhelds are the current trend in the gaming industry, and most companies are coming up with their own takes. What was strange about Microsoft’s iteration was that it was a collaboration project with a third party.
If you’re unaware, previous rumors suggest that Xbox was working on its own in-house handheld, but it was later shelved in the production stages. Even after the Xbox Games Showcase reveal, many in the community were hopeful that the success of ROG Xbox Ally might prompt Microsoft to revive the first-party console project. However, it seems like that won’t be the case, as Microsoft is planning to double down on the new formula.
Is Xbox planning to step away from the console market?
The Verge’s Tom Warren is one of the most reputable sources when we talk about anything related to the Xbox brand. In a recent report, talking about the release of ROG Xbox Ally, Warren opened up about the previous rumours that claimed that Microsoft had dropped the plans of making an in-house handheld.
Warren went on to reveal that he’s heard from his insider sources that the entire Xbox handheld project has been canceled altogether as Microsoft wants to divert resources towards developing the next Xbox software platform.
While Warren expects Microsoft to release its own next-generation Xbox console, he believes that tons of devices from third-party PC manufacturers such as Asus will be considered “next-gen Xbox consoles.”
If it wasn’t already disappointing to hear that in-house Xbox handhelds won’t be a thing, now there’s a chance that Microsoft might be bailing out of the console market entirely. However, the writing was on the wall since the beginning of the current generation of consoles, as Xbox simply failed to compete against PlayStation.
If Xbox truly drops out of the console race, it would be a real shame. It’s a brand that was once a household name but is now just a former shell of itself. Let’s hope whatever direction Microsoft is planning to steer the brand into works out and helps Xbox recover its crown.
Microsoft is also dropping physical Xbox game releases
It’s not just the console market that Microsoft might be planning to dip out of. If you take a look at all the recently announced games at the Xbox Games Showcase 2025, you’ll notice that we didn’t receive any confirmation for a disc version of these titles.
Although we’ve seen titles such as Ninja Gaiden 4 and The Outer Worlds 2 appearing on retail listings, their covers suggest that they will come in a digital game mode. Even though there might be a box, there won’t be a disc inside that carries the game.
What’s truly mind-boggling is that the PlayStation version of these new games seems to contain an actual disc. It’s only Microsoft that has decided to pack code in a box and call it a day. Could this all be a part of Microsoft’s plans for new Xbox software? Well, no one knows for sure, but it’s sad to see that physical game releases have taken yet another hit.
With that said, do you think Xbox should collaborate with third parties to make future consoles? Let us know in the comments below.
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