Microsoft is working on the next version of Xbox hardware, and it’s not just another console upgrade. This is a big change in the gaming world. Xbox President Sarah Bond recently revealed that the company has started designing and prototyping its next-generation console with AMD. At the same time, the company is also expanding into the huge market for handheld games. There have been rumors about the future of the Xbox platform, which has made fans nervous. This news gives fans both peace of mind and excitement. Learn more about Microsoft’s big plans for gear and what they mean for gamers everywhere.
The Big Reveal: Sarah Bond’s Confirmation
In a recent interview with Variety, Xbox President Sarah Bond put all speculation to rest with a clear statement: “We are 100 percent 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 arrives at a critical moment for Xbox, addressing concerns that had been circulating throughout the gaming community about Microsoft potentially stepping away from console hardware
Bond’s announcement came alongside the launch of the ROG Xbox Ally handheld devices, developed in partnership with ASUS. The timing wasn’t accidental—Microsoft wanted to make it crystal clear that these partner devices represent an expansion of the Xbox ecosystem, not a replacement for traditional consoles. The company is pursuing what Bond describes as giving gamers “another choice, in addition to our next-gen hardware”.
This confirmation follows an earlier statement from February 2024, when Bond promised that the next Xbox would deliver “the largest technical leap you will have ever seen in a hardware generation”. That’s a bold claim considering we’ve seen dramatic improvements with every console generation, from the jump to high-definition graphics with the Xbox 360 to the ray-tracing capabilities of the current Xbox Series X
What We Know About The New Xbox
Microsoft hasn’t said much about the details, but a lot of solid leaks and news stories in the industry paint an exciting picture of what’s to come. The new Xbox is said to have the code name “Magnus” and will use cutting edge technology from AMD, such as Zen 6 CPU cores and RDNA 5 GPU design. This is a big step forward in terms of design compared to today.
According to specs that have been leaked, the Magnus APU could have up to 68 RDNA 5 processing units and the GPU would need at least 24MB of L2 cache. It could also have a CPU that has up to three full Zen 6 cores and eight dense Zen 6c cores. The machine will supposedly be able to handle up to 48GB of GDDR7 memory over a 192-bit bus. This is a lot more than what computers can do now. If these numbers are right, Microsoft’s next Xbox could have the same performance as high-end gaming PCs, or even the same raster performance as the RTX 5080.
A release date in 2027 seems likely based on the work schedule. That year is also when Sony hopes to release the PlayStation 6. Microsoft and AMD announced in June 2025 that they would be working together on the creation of silicon for a number of devices, including future first-party consoles and cloud infrastructure. This partnership is seen as strategic and will last for several years. Since they’ve worked together for 20 years, this shows that Microsoft has been dedicated to hardware innovation for a long time.
What We Know About The Upcoming Xbox
Microsoft hasn’t said much about the specifics, but a number of reliable leaks and industry stories paint an exciting picture of what’s to come. The upcoming Xbox console is said to have the secret name “Magnus” and will use AMD’s cutting edge technology, which includes Zen 6 CPU cores and RDNA 5 GPU architecture. This is a big improvement over the current age in terms of architecture.
Leaked specs say that the Magnus APU could have up to 68 RDNA 5 compute units and at least 24MB of L2 cache for the GPU. It could also have a mixed CPU with up to three full Zen 6 cores and eight dense Zen 6c cores. It is said that the machine will be able to handle up to 48GB of GDDR7 memory over a 192-bit bus, which is a lot more than what current systems can handle. If these specs are correct, Microsoft’s next Xbox might have performance on par with high-end game PCs, maybe even on par with the RTX 5080’s raster performance.
The work schedule points to a launch date in 2027, which is the same year that Sony plans to release the PlayStation 6. In June 2025, Microsoft revealed that it had formed a strategic, multi-year relationship with AMD to work together on the design of silicon for a range of devices, such as future first-party consoles and cloud infrastructure. The companies have worked together for 20 years, and this relationship shows that Microsoft is committed to hardware innovation for a long time. “”
The Revolution of Handhelds: Xbox’s Strategy for Portable Games
When Microsoft gets into handheld games, it’s a big change in their strategy. When they came out in October 2025, the ROG Xbox Ally and ROG Xbox Ally X, which were made with ASUS, were Xbox’s first real steps into portable games. These gadgets have 7-inch screens, AMD’s Z2 and Z2 Extreme processors, and run Windows 11 with an Xbox Full Screen Experience that is optimised. It’s
The prices show that they are high-end: the basic ROG Xbox Ally costs $599, and the more powerful Ally X costs $999. People have said that demand is “overwhelming,” even though the prices are high. Early stock sold out quickly. The devices work well with Xbox Game Pass and Xbox Cloud Gaming, and they let you access many PC game stores, such as Steam and Epic Games.
But that’s not all Microsoft has planned. Bond said that the business first made its own handheld computer before choosing to work with ASUS instead in the end. Why? Speed and new ideas. Bond said, “We could do partnered much faster and in a much more creative way” than making everything ourselves. Microsoft is also expanding its Handheld Compatibility Program. Companies like Lenovo are allegedly making devices that work with Xbox. “”
According to predictions, the market for small PC games will grow from 1.7 million units sold in 2024 to 4.7 million units sold by 2029, a growth rate of 175%. On the other hand, Nintendo Switch has sold more than 153 million units, showing how popular handheld games are. It’s clear that Microsoft wants a piece of this rich market.
Features and Expectations for Design
From what Bond has said and what has been leaked, the next version of Xbox hardware is likely to have a number of important features. Backward compatibility will be a top concern, and Microsoft has promised that existing Xbox game libraries will work perfectly on new hardware. Because of this, a lot of people have bought Xbox systems and spent more than a billion hours playing games that work with older versions. “”
Incorporating AI will be very important in the next age. According to leaked specs, the Magnus APU will have an NPU (Neural Processing Unit) that can handle up to 110 TOPS at 6W. This will allow for advanced AI-powered features for rendering images, controlling NPC behaviour, and improving the system. Microsoft has already added AI features to the Xbox Ally, such as Automatic Super Resolution (Auto SR), which improves games without slowing them down too much.
It is also thought that the next Xbox will be more like a PC than any other. It might run a version of Windows and work with third-party stores like Steam, Epic Games Store, and GOG. This would be a big change in how platforms work, making it harder to tell the difference between regular consoles and gaming PCs. Phil Spencer has previously said that he was interested in this area and that he wanted Xbox hardware to work with third-party platforms.
The number of games that can be played in the cloud will keep growing. For example, Xbox Cloud Gaming streamed 140 million hours of games between October and December 2024. With cloud features built in, gamers can start games on their computer and continue them without any problems on handhelds or other devices. This makes for a truly unified gaming experience.
Advantages and Limitations
Advantages:
The next-generation Xbox promises several compelling benefits. The partnership with AMD ensures cutting-edge performance that could potentially outpace competitors. The multi-device ecosystem approach means gamers can choose how they want to play—whether on a powerful home console, a portable handheld, or through cloud streaming on virtually any device.
Xbox Game Pass, which reached approximately 37 million subscribers by early 2025, provides incredible value with day-one access to first-party titles and hundreds of games. The service generated nearly $5 billion in revenue in 2024. Backward compatibility preserves your existing game library, protecting your investment across generations.
Limitations:
However, challenges remain. Xbox Series X|S has sold approximately 33 million units compared to PlayStation 5’s 80.3 million units as of mid-2025, showing Microsoft trails significantly in market share. The rumored price point for the next Xbox could reach $600-700, potentially twice the cost of the PlayStation 6, making it less accessible to budget-conscious gamers.
The handheld market is crowded, with strong competition from Nintendo Switch 2 and Steam Deck, both of which have established user bases and lower price points. Additionally, while the hybrid PC/console approach offers flexibility, it may introduce complexity that traditional console gamers find off-putting.
Real-World Comparisons and Industry Context
Microsoft’s strategy reflects broader gaming industry trends. The global gaming hardware market, valued at $45.2 billion in 2025, is projected to reach $73.6 billion by 2035, growing at a 5.0% CAGR. The handheld gaming segment specifically shows even stronger growth, with the market expected to grow from $4.6 billion in 2024 to $11.3 billion by 2035 at an 8.6% CAGR.
Sony’s PlayStation 6, also expected in 2027, will feature similar AMD technology with Zen 5/6 CPU and RDNA 5 GPU architecture, targeting 8K at 60fps or 4K at 120fps performance. Both next-gen consoles chose AMD over Intel partly to ensure seamless backward compatibility with current libraries. This parallel development cycle will intensify competition between Microsoft and Sony.
Nintendo continues dominating the handheld space, with Switch 2 launching in June 2025 at $449.99 and already rivaling the entire PC handheld market in sales. Steam Deck has sold over 4 million units since 2022, proving PC gamers embrace portable form factors when properly executed.
Microsoft’s Xbox Cloud Gaming represents another competitive front, with the cloud gaming market projected to grow from $2.27 billion in 2024 to $21.04 billion by 2030 at a staggering 44.3% CAGR. This explosive growth validates Microsoft’s investment in cloud infrastructure and multi-device accessibility.
Conclusion: The Future of Xbox Gaming
Microsoft’s confirmation of next-generation Xbox hardware development marks a pivotal moment for the gaming industry. By pursuing both traditional console and handheld form factors while maintaining robust cloud gaming services, Microsoft is betting on flexibility and choice as its competitive advantage. The partnership with AMD promises significant technical improvements, while the expanded ecosystem approach could redefine what it means to be an “Xbox” gamer.
The rumored 2027 launch timeline gives Microsoft approximately two years to refine its hardware and software vision. Bond’s promise of “the largest technical leap” sets extraordinarily high expectations, but the leaked specifications suggest Microsoft has the technology to deliver. The success of this strategy will depend on execution—delivering powerful, reliable hardware at competitive prices while maintaining the seamless, user-friendly experience console gamers expect.
For Xbox fans, the message is clear: the platform isn’t going anywhere. Instead, it’s evolving into something more ambitious—a gaming ecosystem that follows you from your living room to your commute and everywhere in between. Whether you’re a power player who wants cutting-edge performance or a casual gamer looking for portable convenience, Microsoft’s next-generation vision aims to have something for everyone. The gaming landscape of 2027 and beyond promises to be more exciting, more accessible, and more technologically advanced than ever before
