We're been hearing rumors for what feels like an eternity about Microsoft working with ASUS' ROB division on a gaming handheld device and we got confirmation during the Xbox Games Showcase at Summer Game Fest.

The Xbox ROG Ally leaked via regulatory documents earlier this year, and recent reporting by Windows Central claims Microsoft’s plans for an Xbox handheld built in-house have been sidelined for the time being. Could this be the start of Microsoft leaning entirely on third-parties for licensing Xbox gaming hardware?

Microsoft has needed to respond to SteamOS ever since the Steam Deck launched three years ago, and it has steadily been tweaking its Xbox app and the Xbox Game Bar on Windows to make both more handheld-friendly.