Contrary to recent reports, Microsoft is not launching its Xbox handheld console this year. However, sources familiar with the company's plans have revealed that Asus is manufacturing a handheld device, codenamed Project Kennan, which is part of a larger effort to unify Windows and Xbox gaming platforms.

The news comes after a report from Windows Central claimed that Microsoft was working on a handheld console, dubbed "Project Keenan," which was expected to launch later this year. However, Tom Warren, a senior editor at The Verge, has clarified that the correct codename is Project Kennan, and it's being manufactured by Asus as part of a larger platform effort.

According to Warren, Project Kennan is part of Microsoft's plan to unify Windows and Xbox, which was first revealed by Jason Ronald, VP of Xbox gaming devices and ecosystem, in January. The goal is to create a universal library of Xbox and PC games, allowing for seamless playability across multiple devices. The handheld device, powered by Windows, will have an interface that closely resembles what users would find on an Xbox console.

Microsoft is also working on a certified hardware program, which would allow only approved third-party devices to run the unified gaming platform. This effort is codenamed Project Bayside, part of an Xbox UX framework designed to ensure a common Xbox UI across multiple devices.

The implications of this unified platform are significant, as it could potentially allow Xbox games to be played on PC and handheld devices. Microsoft has experience running emulators to get original Xbox and Xbox 360 games working on the Xbox One and Xbox Series S/X, so it's possible that the company could bring Xbox games to PC in the future.

Community efforts to get Xbox One games running on PC are making progress, thanks to a kernel exploit for Xbox One and Xbox Series consoles that was uncovered last year. While Microsoft patched the exploit, enthusiasts have been working on layers to translate Xbox API calls to Windows ones, similar to Valve's Proton work.

Microsoft's Xbox president, Sarah Bond, created a new team focused on game preservation and forward compatibility in early 2024, which suggests that the company is working through licensing hurdles to preserve existing Xbox digital libraries for the unified platform.

The company's next-gen Xbox console, expected to launch in 2027, is likely to be heavily influenced by the handheld-focused platform changes. Microsoft is reportedly working on a "premium successor" to the Xbox Series X, which could potentially be a more PC-like console.

The move is seen as a response to the threat of SteamOS, which has been gaining traction with device makers. Valve's success with the Steam Deck and its Proton work has put pressure on Microsoft to improve the Windows experience on handheld devices like Asus' ROG Ally.

Ultimately, the success of Microsoft's unified gaming platform will depend on execution. The company needs to deliver a seamless gaming experience across multiple devices, and it remains to be seen how the community will respond to the changes.