It just seems like the people designing these things are overthinking the hardware quite a bit. Honestly, take the chromecast ultra hardware and put that with a screen and battery and focus on the lowest cost possible and a compact size. If your product costs as much as a handheld (Switch/SteamDeck) and is almost just as big as those two are as well, it doesn't really have a purpose for existing.
For a true portable Xbox, they'd need to get the XSS profile running on a portable device. It would be the best handheld around instantly with a complete library of games all with settings tailored to the device, and MS wouldn't need to support a separate library for it. Might be something worthwhile for them to do as the generation moves along, even if it was released near the end of the gen you'd still have the cross-gen phase for new titles plus the existing catalog.