Why doesn't Microsoft actually make a true Xbox portable?
Xbox Series S is already the "low power" version of the Xbox. XSS uses 70W which is already lower than the 80W that PS5 low power is aiming for
I imagine there's a couple of reasons.
The first is cost. Microsoft are moving away from subsidised hardware, which means any hand-held they make will be expensive. They're targeting a 30% profit margin for their entire gaming division; trying to produce a cost-effective next-gen hand-held gaming device means it'll either be so expensive as to render it un-sellable, or, the profit margin would be so low as to kill their division's chances of meeting their required profit levels. That's not to mention the R&D they'd need to put in, which would destroy their profitability for at least the first year on the market.
The second is effort. Microsoft are, effectively, fighting a war on many fronts. Nadella has over-extended on AI to try and catch the rest of the market, Windows 11 is receiving steep push-back, and Xbox sunk USD$70b into investments that don't appear to have actually done much. Instead of pushing their teams to support another piece of kit, which would require it's own dedicated team, they're smarting picking their battles. Optimising Windows for hand-held gaming - and full screen gaming in general - allows them to fend off Linux, keep Windows 11 relevant, and start giving people a reason to buy Windows-based PC hand-helds and buy their games from Microsoft.
The last reason is likely time. It takes years of work to get hardware together, and Microsoft has been low on visionary hardware people for over a decade. The time it would take to design up a new, real mobile APU that differentiates itself enough to justify it's own existence - or buy out the people who could deliver it for you - would be years. And Microsoft doesn't have years. Steam's gobbling up mindshare with other manufacturers are gobbling up the rest of the market. Microsoft went with their "Xbox-but-not-really-an-Xbox-but-sorta-an-Xbox" handheld because it's clear they simply cannot bring something to market in time to compete. So, let your partners do it for you, and spend your resources elsewhere.
The days of Microsoft properly innovating in the gaming space appear to be over. Now, they're in it to push people back to Windows and the greater Microsoft ecosystem as they wind down "Xbox". Their "pc-console" achieves that goal and offers players an off-ramp from the console space into the PC space, whereas a bespoke hand-held APU console doesn't really achieve that goal.
My two cents, of course.
