Microsoft is officially building the next generation of Xbox hardware, confirming a strategic, multi-year partnership with AMD to co-engineer the silicon for a new family of devices. The announcement, made by Xbox President Sarah Bond, outlines a future that includes both a traditional home console and a first-party Xbox handheld, putting an end to months of speculation. The move signals a profound strategic pivot for the gaming giant, promising an experience that is not confined to a single device or digital storefront.
This new vision aims to create a unified gaming platform that travels with the player, backed by a commitment to full backward compatibility with the existing library of Xbox games. In a statement that redefines the company’s hardware philosophy, Bond declared the goal is to deliver “This is all about building you a gaming platform that’s always with you, so you can play the games you want across devices anywhere you want, delivering you an Xbox experience not locked to a single store or tied to one device.”
This approach suggests a future where players might access games from other PC storefronts directly on their console, a significant departure from the closed ecosystem model that has dominated the console market for decades.
The confirmation of a first-party handheld is particularly noteworthy, representing a direct challenge to competitors like the Steam Deck and Nintendo Switch. By partnering with AMD across a portfolio of devices, Microsoft is not just preparing its next console for the living room; it is building an ecosystem designed to be accessible anywhere, fundamentally changing what it means to be an Xbox player.
An Open Platform For a New Generation
At the core of Microsoft’s announcement is a strategic shift towards a more open and flexible gaming ecosystem. The company is explicitly moving away from the “walled garden” approach, a decision that could reshape the console business model. This player-first vision was echoed by AMD’s leadership. Jack Huynh, EVP of the Computing and Graphics Group, described it as “a bold, shared vision” that is “grounded in an open, player-first ecosystem — not locked to a single device or store.” The partnership, he added, will deliver next-generation graphics, AI-enhanced gameplay, and full backward compatibility.
This strategy is being built in close collaboration with the Windows team, which is intended to ensure Windows remains the premier platform for gaming. However, this newfound openness introduces new questions. Community discussions have highlighted a potential trade-off for consumers: if the hardware is not subsidized by a locked-in digital store where Microsoft earns a 30% cut, future consoles could carry a higher upfront price tag. It’s a complex economic challenge that Microsoft must navigate as it balances platform openness with hardware affordability.
The Handheld Saga: From Shelved to Center Stage
The official confirmation of a first-party Xbox handheld marks a dramatic turnaround in Microsoft’s public strategy. This announcement directly supersedes reports from late May 2025, which indicated Microsoft was sidelining its own handheld development to focus on improving the Windows 11 experience for third-party devices.
This software-first approach was further detailed in early June, when Microsoft revealed a new console-like UI for Windows handhelds, which was reportedly repurposed from a shelved internal device codenamed ‘Project Pembrooke.’
The belief that a first-party device was off the table had become widespread, with outlets like TrueAchievements citing insiders who claimed in 2024 the project was effectively canceled. The June 17th announcement, however, decisively reverses that narrative. By explicitly including a device “in your hands” as part of the core next-generation plan with AMD, Microsoft has elevated the handheld from a paused experiment to a strategic priority, signaling its intent to compete directly in the portable gaming market with its own hardware.
The AMD Partnership and a Glimpse at Future Tech
The renewed partnership with AMD is set to power this ambitious hardware lineup, promising what Microsoft calls “next-level performance, cutting-edge graphics, [and] breakthrough gameplay,” according to a statement reported by IGN. While specific technical details remain under wraps, the announcement highlighted that the new silicon will unlock “player experiences enhanced with the power of AI.” This aligns with Microsoft’s broader push into artificial intelligence, which includes the recent beta launch of its Copilot for Gaming AI assistant.
Further fueling speculation, the announcement has brought renewed attention to previously leaked documents. As detailed by VideoCardz.com and other outlets, these leaks suggested Microsoft was exploring AMD’s unannounced RDNA 5 graphics architecture and Zen 6 CPU for its next console.
They might also include a dedicated Neural Processing Unit (NPU), which would be used to accelerate the AI-driven experiences Microsoft is now officially promising. While this remains speculative, it offers a tantalizing glimpse into the technological leap Microsoft and AMD are aiming for.
Ultimately, Microsoft is architecting a comprehensive evolution of the Xbox brand. The strategy marries a more open, accessible software platform with a diverse hardware lineup, including a long-awaited entry into the handheld market. By leveraging a deep partnership with AMD to push the boundaries of silicon design, Microsoft is betting that the future of gaming isn’t about a single box, but an entire ecosystem that empowers players to engage with their library anywhere and on any device they choose.
