The Xbox Handheld Is Launching at the Worst Possible Moment

Who has two thumbs and wants to reestablish Windows as the main way to play games on handhelds? It’s Microsoft, which finally revealed its ROG Xbox Ally with its forking appendage grips in concert with Asus. The device sports the twin arms to better resemble a typical Xbox controller. It’s supposed to offer a console-like experience now that Microsoft has made a version of Windows you’ll actually want to use on a smaller screen. While it’s made to compete against the dominance of Steam Deck and SteamOS, the real way it will succeed is if it can offer something as affordable as non-Windows handhelds.

Xbox and Asus haven’t exactly kept their intentions to create a handheld secret. The device the two brothers-in-arms finally showed off at Microsoft’s weekend games showcase diverges from the flat-panel design established by the Nintendo Switch back in 2017. The odd look is meant to emulate the feel of a typical Xbox controller. The face buttons sport the same red, blue, green, and yellow colors of Microsoft’s gaming brand, though the d-pad appears to be the same as that found on older ROG devices. As if you didn’t already know this was an Asus-made handheld, the ROG Xbox Ally has a similar 7-inch IPS LCD display that supports 120 Hz refresh rates and VRR (variable refresh rate).

What’s more important to gamers is how Microsoft claimed it has finally made a Windows experience you’ll want to use on a small screen. In conversations with The Verge, execs said they massaged the Xbox app and Xbox Game Bar into something you can navigate with thumbsticks. You should be able to access all your games from the Xbox app as well as Steam, Epic Games Store, GOG, and practically any other launcher. The device launches directly into the app, but just like SteamOS, you can hit a button to launch into the desktop version of Windows. What’s more, Microsoft claimed it eliminated background tasks in the smaller form factor to help increase performance, improve battery life, and make it easier to sleep and wake the device directly into a game.

The ROG Xbox Ally specs include a base 16GB of RAM and 512GB of storage. That’s relatively standard for handheld PCs, but its chip is far more telling for what this device is capable of. AMD designed a special CPU for the Xbox handheld called the Ryzen Z2 A. This CPU seems most equivalent to the power of the Steam Deck’s custom processor. It’s based on the same Zen 2 chip architecture with 4 cores and 8 threads. The Z2 A also includes a configurable TDP between 6W and 20W. This “thermal design power” basically indicates how much power the chip can draw for higher-end games. The Steam Deck maxes out at 15W, while a more powerful handheld may go as high as 30W or 40W. In an interview with GameFile, Asus consumer vice president Shawn Yen said the Xbox Ally is geared toward gaming at a 720p resolution, essentially equivalent to the Steam Deck’s own screen.

The better way to play your games at 1080p natively and take advantage of the 120 Hz refresh rate IPS display is with the ROG Xbox Ally X (which is an eXample of eXactly as many “Xs” you can use before you go too “eXtreme”). The more-premium device includes 24GB of RAM and a 1TB SSD. More importantly, it runs on the AMD Ryzen Z2 Extreme, the more-powerful Zen 5-based chip. It’s the sequel to what powered the higher-end version of the 2023 Asus ROG Ally. While it’s supposed to be more capable than previous handheld-centric CPUs, we’ve yet to see it in action beyond a few truncated demos at CES and beyond. The lower-end Xbox handheld will be geared for less-demanding titles and game streaming, most prominently through Xbox Game Pass.

Microsoft’s big foray into gaming handhelds is a tag-team effort with the makers of Windows and Asus through its ROG brand. The ROG Xbox Ally is equivalent to the Asus ROG Ally from 2023, while the ROG Xbox Ally X is equivalent to last year’s ROG Ally X. The latter was a $800 device that was one of the best of its class, thanks to its strong performance and battery life. However, that device now costs closer to $900 from places like Best Buy, likely inflated due to Trump’s tariffs.

Windows-based handhelds cost more than ones with SteamOS. The Steam Deck OLED—the version that most people want—starts at $550 for a version with 512GB of storage. The only other SteamOS-based handheld is currently the Lenovo Legion Go S with its 8-inch screen, which starts at $600. The same handheld PC with Windows costs over $700. The extra cost can be attributed to Windows licensing fees, at least in part. SteamOS—which is based on a Linux distro—is made to funnel people toward Valve’s digital storefront. Valve has every reason to keep that operating system cheap.

Microsoft has no choice but to compete on price, especially when the competition includes Nintendo’s Switch 2. The original Switch was one of Nintendo’s best-selling devices ever, and its $450 sequel is already set to hit higher expectations than all other major handheld PCs combined. The Steam Deck is still the best seller, but speculation from analyst firm IDC suggested back in February that total handheld PC shipments for 2025 may be just 1.9 million. Nintendo forecasted it would sell 15 million Switch 2s this financial year, which ends in March 2026.

Microsoft is going to be squeezed between the two dominant handheld makers. SteamOS has already proved it offers better performance on handhelds than the same device with Windows. That OS is now compatible with any handheld running an AMD chip, which is why Microsoft is pushing this new handheld-centric version of Windows so hard. Microsoft suggested it will push updates to other Windows-based handhelds in the future. We still don’t know when that will happen. There’s no release date for the Xbox handheld, save for hints it could arrive before the holiday season at the end of the year. Meanwhile, the Steam Deck and Switch 2 will continue to reign supreme.