Microsoft is releasing the ROG Xbox Ally soon on October 16, 2025, by partnering up with Asus. However, it wasn’t the initial plan as Microsoft was in talks with AMD for creating a custom SoC for their own dedicated handheld console.
However, that didn’t come true because AMD had some hefty demands from Microsoft.
If AMD Wasn’t Greedy Xbox Handheld Could Have Been Real
KeplerL2 is well respected as an insider due to his resources in hardware manufacturing. In a recent discussion, it was revealed by him that Microsoft’s initial plan was to create its own handheld product, instead of partnering with Asus.
In the words of KeplerL2, the plan didn’t go through due to the agreement that AMD threw at Microsoft. AMD actually needed a commitment for 10 million chips, so that they could justify the research and development. However, it was risky for Microsoft because of the sales numbers of competitor products.
As of now, Valve has managed to sell around five million units, while Asus and Lenovo combined have reached sales of around two million units. Even with their unit sales combined, the number simply doesn’t come anywhere close. Thus, Microsoft chose to drop the idea and went forward with bringing a custom experience with Asus ROG.
Opinion: Would a Dedicated Xbox Handheld Have Worked Out for Microsoft?
Since the first-party Xbox handheld is one of the questions, all we can do is theorize that the cancellation was justified. For starters, some people believed Microsoft could have made the agreement and used the same chip for their Surface lineup. However, AMD is making these chips with gaming in focus, which is noticeable with the Steam Deck.
On the other hand, Xbox as a brand has a huge fan following, which could have aided its sales. In August 2025, it was recorded that Microsoft was able to sell about 33.2 million consoles. Not only that, in Q1 of 2025, the Xbox Game Pass held around 37 million subscribers.
If Microsoft were to make a dedicated console, it might have worked out. Furthermore, it could have been the breakthrough moment Xbox needed following the release of the PSP. In just a decade of its lifetime, PlayStation was able to gain 80 million sales, which is bonkers.
If Xbox were not to partner up with Asus and sell the handheld with their own tag and engineering, people might have called it the PSP successor. But again, there’s also Nintendo Switch 2, which is gaining users with each passing day. So it would have been pretty competitive, now that the console is getting AAA releases too.
In a way, Microsoft was right not to pursue the risk associated with the AMD agreement. Do you think Microsoft could have made alternative plans with a dedicated SoC? Share your thoughts with us in the comments below.
