Despite declining sales and the latest 'Xbox' being a handheld PC, Microsoft says it's still making a next-gen console: 'We are actively investing in our future first-party consoles and devices'

An ROG Xbox Ally X and Ally shown during Microsoft's Xbox stream in June 2025.

(Image credit: Microsoft)

As reported by Windows Central, Microsoft has stated it has no plans to exit the hardware market, despite poor sales of the Series X and S. There have been rumors that it would eschew traditional home consoles in favor of cloud gaming and more PC-like hardware, such as the imminent Xbox ROG Allies.

"We are actively investing in our future first-party consoles and devices designed, engineered and built by Xbox," The company said in a statement to Windows Central on October 5. "For more details, the community can revisit our agreement announcement with AMD."

This was in response to an alleged insider reporting that Xbox's hardware future was "up in the air." That rumor also built on the brand's ongoing, public-facing crises and apparent de-emphasizing of its console hardware:

Poor sales of the Series consoles.
High profile studio closures.
Apparent diminishing returns on Game Pass, and the service's price hike.
A general multiplatform shift: Day and date PC (and even some PS5) releases, PC Game Pass, the "This is an Xbox" marketing tagline, and the Windows-based Xbox ROG Ally.

There's reason to be concerned for Xbox's future, since it's tied to the future of so many beloved game studios. Microsoft has publicly committed to new hardware being part of that future, both here and in its partnership announcement with AMD over the summer. But Xbox's ongoing instability and Microsoft's lack of transparency don't inspire confidence.

As members of Digital Foundry discussed on a weekly podcast, Microsoft's definition of "console" may be shifting to a place that's not in line with the colloquial understanding. Is the Xbox ROG Ally X a console? What about if the company's next generation home system turns out to be an Xbox-branded, Windows-based living room PC, an effective Xbox Steam Machine?

There's also the possibility of a straight up change of plans or cancellation: Windows Central cites anonymous accounts of a scrapped first party handheld (as opposed to the Asus-partnered Ally), as well as an abandoned cloud-based console project. Trust is at a nadir with Xbox at the moment, which greatly concerns me with so much of the games industry, particularly North American triple-A, effectively hostage to the brand's continued health and growth.

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Ted has been thinking about PC games and bothering anyone who would listen with his thoughts on them ever since he booted up his sister's copy of Neverwinter Nights on the family computer. He is obsessed with all things CRPG and CRPG-adjacent, but has also covered esports, modding, and rare game collecting. When he's not playing or writing about games, you can find Ted lifting weights on his back porch. You can follow Ted on Bluesky.

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