The Nintendo Switch is on track to become the bestselling game console of all time. Sony’s PS5 will likely surpass the Xbox One’s entire lifetime sales later this year. Meanwhile, Microsoft’s newer Xbox Series X and S, with their comparatively disappointing exclusive games, are firmly in third place yet again — and it doesn’t look like Xbox Game Pass will ever fill the gap. 

Microsoft isn’t planning to take this lying down. It’s among the largest video game companies in the world now that it owns Activision Blizzard, and it’s going to act. This Thursday, we expect the company to reveal a seismic shift in strategy, one where it could bring Xbox exclusives like Hi-Fi Rush, Starfield, even Indiana Jones to PlayStation and / or Switch. 

To Xbox diehards, that might sound a lot like giving up! What’s the point of buying the one box that doesn’t have exclusive games? But there’s a different way Microsoft could demonstrate hardware leadership, build a console worth buying, and fulfill its “play-anywhere” ambitions. Microsoft could harness the incredible flexibility of Windows to build the best Nintendo Switch competitor ever made. 

Microsoft could follow the Steam Deck playbook, putting the power of a mini-Xbox in your hands. 

Right now, it feels like handheld gaming (not cloud!) is the future, and the world has been waiting for Microsoft to make its move. We tried phones with attached gamepads and cloud portables, but nothing has lit a spark like the dedicated Nintendo Switch and Steam Deck. Handheld PC makers are crying out for a piece of the action, throwing awkward layers atop a bloated Windows operating system for lack of anything better. Microsoft could beat them, or join them, if it’s willing to take the reins. 

Imagine if the next Xbox looked like a Steam Deck by way of Microsoft’s design teams:  comfortable and sleek at the same time. Imagine an Xbox interface where Microsoft’s PC games, console games, and cloud games live side by side. Imagine if you could simply pick “Play Halo,” wherever you are in the world, your handheld delivering the best version possible — whether that be locally downloaded, streamed from your home Xbox, streamed from the cloud, or possibly more than one simultaneously. Imagine picking up right where you left off on your TV or vice versa, playing with your friends across both Xbox and PC.  

We have the technology. Microsoft in particular has the technology. It’s just a little fragmented, waiting for execs and engineers to fit the puzzle pieces together in a single, seamless experience.

If you’re an Xbox Game Pass Ultimate subscriber, you can already download a copy of Halo Infinite to your PC, or Xbox, or stream it from xCloud. The downloaded Xbox copy can already be streamed to a Windows PC over your home network as well. No matter which way you play, your saved games and your friends can typically come along for the ride.

In 2013, I told you how console games and PC games were beginning to seriously merge. That’s when Sony and Microsoft started using AMD processors running on the x86 instruction set to power their hardware. It made it easier than ever for developers to build a single game for PlayStation, Xbox, and PC — and both Microsoft and Sony saw additional opportunity. They started releasing their biggest games on Windows PCs, too. You no longer needed a console to play Halo or God of War, and it seemed like Microsoft preferred it that way.

But when Valve released the Steam Deck, it was Sony, not Microsoft, that capitalized. We wrote how the Steam Deck made PlayStation’s biggest games portable, and how the Steam Deck made us buy games we would have otherwise purchased for Nintendo Switch. But that meant we were buying our games through Steam rather than paying Microsoft.

Sure, there was that 14-step process to get Xbox Cloud Gaming working on the Steam Deck, you could install a half-baked version of Windows at your own risk, and eventually Microsoft helped Valve get games like Forza Horizon 5 and Halo Infinite working on Valve’s handheld well enough to justify a purchase. But it wasn’t the whole package.

I’ve spent lots of time with both the Asus ROG Ally and Lenovo Legion Go, too, and I can’t recommend either Windows-powered Steam Deck-alike without serious reservations. I find it stunning — and a little embarrassing — how much more accessible Windows games are on the Linux-based Steam Deck than they are on a native Windows machine. And at the end of the day, they’re still propping up Valve’s Steam game store more than Microsoft’s PC Game Pass.

But while that’s partly Microsoft’s fault, it’s also Microsoft’s opportunity, and I bet it can rise to the occasion.

To truly succeed, Microsoft needs more than a Windows handheld with an Xbox app on top. It should play all the Xbox games, not just PC ones. Like the Steam Deck does with Windows games atop Linux, it should run a compatibility layer (or maybe a virtual machine) so your Xbox Series games just work — optimally on a custom chip that gives it better battery life than today’s Windows handhelds.

This should all be within reach. Microsoft is the company that pulled a rabbit out of the hat to make the x86-based Xbox One backward compatible with loads of Xbox 360 games that were designed to run on PowerPC chips. It’s the company that once spent $100 million just to refine its Xbox gamepad. It’s a company that’s repeatedly commissioned semi-custom processors for its Xbox consoles — does anyone think AMD would turn down the opportunity to do a custom part for an Xbox handheld? Would Intel or Nvidia, for that matter?

Such a chip should match the graphical performance of an Xbox Series S, if not an Xbox Series X. While the Steam Deck’s AMD “Aerith” and “Sephiroth” AMD chips don’t, the chips inside the Asus ROG Ally and Lenovo Legion Go already offer more raw teraflops than a Series S when they’re plugged into the wall. If they targeted 720p or 800p resolution when on battery, like the Steam Deck, a new chip should be more than capable of playing current-gen Xbox fare. 

Such a handheld might even play next-gen Xbox games if Microsoft’s dreams become reality — by letting the cloud pick up the slack. Hideo Kojima’s OD is being built on Microsoft’s Xbox cloud, and the company had an internal vision for cloud hybrid games by 2028.

Either way, I don’t think Microsoft can afford to miss this coming moment unless it’s abandoning Xbox hardware for good. With “multiple millions” sold, the Steam Deck isn’t a huge threat yet. But if the Nintendo Switch 2 is a success, and Sony decides to make a truly portable PlayStation to join it, Microsoft wouldn’t want to be the only one betting on a box instead.