Microsoft’s future Xbox strategy slowly comes into view

And… just like that – with a single one-minute-and-a-half video – quite a few things that journalists, analysts and gamers interested in the future of Xbox have long been speculating about now start making sense. Sarah Bond, president for Xbox at Microsoft, confirmed a few hours ago that the company is working with AMD on gaming hardware for future Xbox consoles. The possibility of this happening has always been very high – no matter what leaked documents implied in the past about a scenario where Microsoft could leverage ARM’s processor architecture – but there’s a number of statements in this video that, taken altogether, pretty much outline what Microsoft intends to do with the Xbox brand going forward.

First, Sarah Bond’s exact wording regarding Microsoft’s collaboration with AMD:

“At Xbox our vision is for you to play the games you want with the people you want, anywhere you want. That’s why we’re investing in our next-generation hardware lineup — across console, handheld, PC, cloud, and accessories. I’m thrilled to share we’ve established a strategic multi-year partnership with AMD to co-engineer silicon across a portfolio of devices — including our next-generation Xbox consoles in your living room and in your hands. Together with AMD we’re advancing the state of art in gaming silicon to deliver the next generation of graphics innovation, to unlock a deeper level of visual quality and immersive gameplay and player experiences enhanced with the power of AI.”

Microsoft had already officially confirmed it’s working on next-generation Xbox hardware – one promising to “deliver the largest technical leap seen in a hardware generation” – while several information leaks from multiple sources have also mentioned two different Xbox handheld systems. One of those two, on track to be released this year, turned out to be the new Asus ROG Xbox Ally pair of devices, while the other was thought to be a custom, more powerful system planned for 2027 or later (supposedly put on hold at some point recently).

Microsoft talking about next-generation Xbox consoles – “in your living room and in your hands” no less – can only mean that both a powerful home system and a more affordable handheld system are still very much in the cards. There may be more than two such devices, too, available in the form of multiple models not necessarily manufactured by the company itself – a possible general direction some of us believe Microsoft was heading in anyway. There’s more included in the company’s announcement that’s worth looking into, though, so here it goes.

The next Xbox systems will leverage Windows, not a custom OS

The new information Sarah Bond shared in this YouTube video is just as important for the future of Xbox as a brand, maybe even more so. Here’s the exact wording used:

“We will offer all of that [what’s mentioned earlier] while maintaining compatibility with your existing library of Xbox games. 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. That’s why we’re working closely with the Windows team to ensure that Windows is the number one platform for gaming. The next-generation of Xbox is coming to life and this is just the beginning, we can’t wait to show you what’s next.”

What do these few sentences confirm? Quite a few things. The next-generation Xbox systems will allow players access content coming from other digital games delivery services too, not just the Xbox store, for one. Since it’s highly unlikely that Sony or Nintendo would work with Microsoft on an emulation layer for their own games, we’re basically talking about Steam and the Epic Games Store here, maybe Ubisoft Connect, EA App and Battle.net too.

We’ve already seen this in action: while unveiling of the new ROG Xbox Ally systems Microsoft showed off a reworked user interface called “the Xbox Experience for Handheld”. This is not an upgraded version of the current Xbox app but rather a full-screen gamecentric environment closer to SteamOS, complete with a game overlay and quick settings menu. Within this new “Xbox Experience for Handheld” one can clearly see the portal apps of other digital storefronts, such as Battle.net, being selectable (so any PC games installed through those are playable because it’s the full Windows 11 OS underneath it all).

Microsoft noted that when the ROG Xbox Ally handhelds work within that environment, they enter a game-focused mode that minimizes background processes or tasks in order to maximize resources (the Windows 11 desktop remains accessible). It’s a promise that the company had made all the way back in 2021 during the unveiling of Windows 11 but has yet to actually deliver on, so it will be nice to have that on handheld systems and maybe even on desktop systems at some point down the road.

Then, it’s the very fact that Bond refers to Windows as part of the development process of the next Xbox systems that signals an important change in Microsoft’s strategy. The Xbox Series S/X already run on a greatly modified, custom version of Windows, but it’s obviously so cut-down that it can’t e.g. present a desktop environment or run installable applications outside of the Xbox store. Xbox working closely with the Windows team practically means that the already demonstrated “Xbox Experience for Handheld” user interface will run either “on top” of the full Windows operating system or as a tightly integrated part of it. Given time, this could hold true for both PCs running Windows 11/12 and next-gen Xbox systems.

But… wouldn’t all that essentially mean that the next AMD-based Xbox systems will be little more than fixed-hardware gaming PCs? That is where the second new piece of information comes in: by promising it will maintain compatibility with people’s existing Xbox game library, Microsoft basically confirmed it’s been working on an Xbox emulation layer for PC – one that is capable of running Xbox Series S/X, Xbox One and Xbox 360 games on Windows (since the company has already done most of the work necessary to make a great number of X360 games work on Xbox One and XSS/XSX).

This is the kind of proprietary software that Microsoft can leverage as a competitive advantage. The company will be able to say that it managed to keep almost 20 years’ worth of Xbox games accessible by anyone buying its latest Xbox systems (the powerful home console will even improve current Xbox games in various ways). It will also be able to tell PC gamers that these incoming Xbox systems are able to play all their favorite PC titles and open up an extensive back catalogue of Xbox games that will never get a PC version. Not bad, not bad at all.

So what does all of this mean for Xbox going forward?

This is great news for long-time Xbox fans, especially if the Xbox emulation layer for Windows can somehow work with past Xbox games on disc too (on the next-gen home console obviously). Despite Microsoft now officially being a platform-agnostic, multi-format games publisher, its plan to give millions of people the option of having a brand new Xbox system – one capable of playing all or most of the Xbox titles they’ve purchased over the last two decades – is welcome. Whether that new Xbox system is Microsoft-made or just Microsoft-designed (made and sold by other manufacturers such as Asus) is not as important as the fact that such a choice will exist.

If anything, mainstream consumers who have traditionally preferred consoles to PCs will be able to extract even more value out of an Xbox system able to play both Xbox and PC games well – while PC gamers will be granted access to a much greater part of the Game Pass library, getting more value out of their subscription too. Game Pass under a unified Xbox/Windows platform will also make more sense for more consumers as a whole, which happens to be what Microsoft is more interested in too. It does look like a win-win situation for everyone involved, assuming it works as well as the company promises it will.

Of course, Microsoft being Microsoft, it would be naive to think that the company is doing all of that “for the love of the video game”. The Redmond giant has been widely criticized for abandoning PC gamers in terms of new Windows gamecentric features and proper support, for disappointing millions of loyal Xbox gamers by mishandling the Xbox platform and brand, as well as for routinely frustrating so many people by making countless aggressive, consumer-unfriendly choices when it comes to Windows 10 and Windows 11 in general. Microsoft has a lot to atone for – and this unification of Xbox gaming and PC gaming could help with that.

The simple truth is that, over the past decade or so, the company focused so much on the enterprise, cloud services and AI side of things that it came really, really close to completely disassociate the Microsoft name from modern gaming. Given how much money the company has spent since 2001 in order to remain relevant in this market, that’s just embarrassing. It’s high time Microsoft put some actual effort into making this huge three-decade investment finally work and this plan, as now outlined, would be a great first step in the right direction. Provided, of course, that the execution of that plan is flawless… and about that we’ll just have to see, don’t we?