What Microsoft has been saying about Xbox lately strongly implies that this is a Windows handheld designed to solve software and user experience problems with using current Windows handhelds. And signs are pointing toward the next Xbox console coming sooner than the next PlayStation and essentially being a PC running a console version of Windows. Some speculation on my part, but I’m not the only one coming to those conclusions.
Sure, but we’re talking about a handheld. Yes, performance is improving generation over generation, but in the handheld space power usage and heat dissipation are equally important. If you’ve been keeping up with recent innovations, you’ll see that generally we are making more powerful parts, but they’re getting much more power hungry for every little percent of improvement they bring in raw horsepower. So far it doesn’t look like you could even get Xbox series S performance in a handheld yet. At least not at a reasonably portable size, cost, or battery life. You could get a little better than PS4 pro performance in a handheld at present, based on what I’ve seen. Which is not a full generational leap over what’s out there.
I think they’ll be fine. They don’t need to be the most powerful. Steam Deck is weaker than Rog Ally but remains the more popular option due to a better user experience and the Switch was significantly underpowered compared to the competition but remains a popular option to other things they bring to the table.
Microsoft won’t push for an expensive handheld so anything they bring out would likely be weaker than the top end of the market. It really comes down to what other offerings they bring.