It’s been a whirlwind October for Microsoft’s Xbox division, with a flurry of announcements and speculation swirling around the future of its gaming hardware. On October 18, 2025, Xbox president Sarah Bond sat down with Variety to reconfirm what many fans have been eagerly awaiting: the next-generation Xbox console is not only real, it’s already deep in the prototyping and design stages. Bond’s words were clear and direct: “We are 100% looking at making things in the future. We have our next-gen hardware in development. We’ve been looking at prototyping, designing. We have a partnership we’ve announced with AMD around it, so that is coming.”
This confirmation comes at a pivotal moment. The gaming world is abuzz with the global launch of the ASUS ROG Xbox Ally and Ally X handhelds, devices that signal Microsoft’s serious intent to expand the Xbox ecosystem beyond the living room. But Bond was quick to clarify that these handhelds are not a replacement for traditional consoles. “What we saw here was an opportunity to innovate in a new way and to bring gamers another choice, in addition to our next-gen hardware,” she explained, emphasizing that the company’s strategy is about giving players more ways to play, not abandoning the classic console experience.
Microsoft’s partnership with AMD is central to this vision. According to Variety, the next-gen Xbox is expected to be powered by AMD’s upcoming “Magnus” APU, a chip promising “faster speeds, better efficiency, and stronger AI capabilities.” While there’s no official release window yet, leaks and industry chatter suggest a 2027 launch, which would put it head-to-head with Sony’s anticipated PlayStation 6. If Bond’s earlier statement that this will be “the largest technical leap you will have ever seen in a hardware generation” holds true, gamers could be in for a seismic shift in console power and capability.
Meanwhile, the ROG Ally and Ally X handhelds—developed in partnership with ASUS and AMD—have hit the market with a bang. The $599 Ally and the $999 Ally X have seen overwhelming demand, with early stock reportedly selling out at major retailers. While some were taken aback by the steep price tags, Bond explained that “ASUS set the final numbers, $599 for the Ally and $999 for the Ally X, based on market insight.” Still, the appetite for these devices is clear, and Microsoft is treating handheld gaming as a long-term platform, not a passing fad.
Backing up this commitment, Microsoft unveiled a detailed software roadmap for the ROG Ally line. According to Digital Trends, starting in early 2026, these handhelds will receive a suite of updates: Default Game Profiles for optimized performance, enhanced docking experiences for seamless transitions between handheld and desktop setups, and AI-powered Automatic Super Resolution that sharpens visuals and improves frame rates on the fly. Perhaps most intriguing, the system will also feature AI Highlight Reels, which automatically capture and edit players’ most impressive gameplay moments using machine learning. All of this is designed to make the ROG Ally experience feel more like an extension of the Xbox ecosystem rather than a standalone gadget.
ASUS isn’t stopping at software, either. The company is preparing firmware updates to improve battery efficiency and refine cooling on the Ally X, addressing early feedback from the community. Microsoft and ASUS have both pledged to provide long-term support, ensuring that the hardware and software will keep evolving well after launch.
But not everyone in the Xbox community is on board with this new direction. The release of a $999 handheld and a recent price hike for Xbox Game Pass Ultimate have sparked heated debates online. As reported by Metro, some fans are speculating that Microsoft is preparing to move away from traditional consoles entirely, instead focusing on devices that blur the line between PC and console. The rumor mill is churning with talk of the next Xbox running a Windows-like operating system, potentially allowing users to access games from multiple storefronts—including Steam—much like the new ROG Ally.
On Reddit, opinions are sharply divided. One user, reacting to reviews of the Xbox Ally, mused, “After seeing the reviews for the Xbox Ally, it’s possible that Xbox are seeing how everyone reacts to a Windows-Xbox hybrid.” But skepticism is rife, too. “If so, we can expect a lacklustre console with minimal effort. Yay,” wrote another frustrated fan. Others worry that a pivot to a PC-branded Xbox could alienate longtime console loyalists, with one commenter predicting, “If Microsoft ever releases a PC branded as a ‘next-gen Xbox,’ it will flop harder than Google Stadia.”
Speculation even extends to potential pricing, with some fans guessing that the next Xbox could launch at around $700 for the S model and $1100 for the X model—figures that would put it in direct competition with high-end gaming PCs. The idea of a console that’s really a PC in disguise is, understandably, divisive. For some, it’s an exciting vision of a unified, flexible gaming future. For others, it’s a betrayal of what made consoles special in the first place: simplicity, accessibility, and a curated gaming experience.
Yet, Microsoft’s public messaging remains focused on choice and innovation. Bond stressed, “We are always listening to what players and creators want. When there is demand for innovation, we’re going to build it.” The company’s approach appears to be one of expansion, not replacement—building a family of devices that cater to a wide range of preferences, from traditional living room consoles to high-powered handhelds and, perhaps, something in between.
As the dust settles on this month’s announcements, one thing is clear: the future of Xbox is more open, more ambitious, and arguably more uncertain than ever before. Whether the next-generation console sticks closely to its roots or boldly redefines what a console can be, all eyes will be on Microsoft in the coming years. For now, fans can only watch, speculate, and—if they’re lucky—snag an Ally X before it sells out again.
The next chapter in the Xbox story is being written in real time, and it promises to be one of the most intriguing yet.
