That’s why they’re doing this. The sleeping dragon is waking up. They’re gonna pour all of their marketing effort into killing the Steam Deck because of the threat it represents for consumer Windows.

This is how Microsoft has operated since day 1:

• they let Dartmouth take the lead with Dartmouth BASIC and followed up with Altair BASIC (Microsoft’s very first product)
• they let Gary Kildall take the lead with CP/M and followed up with DOS
• they let WordPerfect take the lead and followed up with Word
• they let VisiCalc and Lotus 123 take the lead and followed up with Excel
• they let Apple take the lead on GUI with the Mac and followed up with Windows
• they let Netscape take the lead and followed up with IE
• they let Sony take the lead with PlayStation and followed up with Xbox
• they let Apple take the lead with iPad and followed up with Surface
• now they’re letting Valve take the lead with SteamDeck and following up with their own handheld

While I agree that the actual code base needs to be develop and augmented on the backend to make this work, that's not really what I'm saying. I'm pointing out that they already have the visual design and working template for a handheld based OS ( navigation and so on). Just that coupled with something like what they had with Windows 10 (the tablet interface for 10 was better than 11) would be fine. It could literally be an Xbox version of steam' big picture mode (because you can launch directly into it from Windows on 10). There even already exists a slimmed down version of Windows 11 to save on resource hogging.

The steam deck has been out long enough for them to have implemented this kind of thing. They've had time to design it. They've just been using that time to deliberately figure out how to shoehorn AI and telemetry and the rest into it because at the end of the day they still want to siphon up all that data.

Why does this thing look like it fell into a ravine.

I agree. They've had time if they cared about making this product before the Steam Deck was a success, but much like with cloud infrastructure, or search engines, or MP3 players, or mobile, or game consoles in general, they only really cared about it after someone else made a great version of what they could have been doing themselves.

Performance is really a key factor, and gives rise to now being a time when truly competitive handheld is possible. Like this chart shows, there was a quadrupling of power between 2016 and 2020, but only a doubling of power between 2020 and 2023, with stagnation for the last couple years, largely due to technical limitations. RAM and storage have also seen massive boosts followed by stagnation, as well as a closing of the bandwidth gap between RAM and storage (from about 6 orders of magnitude to 3 orders of magnitude difference with solid state storage). The GPU front is still increasing in performance, with more watts and/or transistors giving more power, with raw performance increasing by a factor of 8 over 10 years.

Now you take those base values for performance, and a few things come together. First, storage has become low-energy, and is more performant, especially in the mobile market. Second, lower power CPUs are reasonably competitive, which means longer battery run time at an acceptable performance level. Third, while there is a bigger gap on GPU performance, smaller screens mean fewer pixels to drive so something a little older and less power hungry can still give satisfactory results. Put those all together, coupled with the steady and constant improvements in battery performance over the last 30 years, and you can make an acceptable mobile computer platform with decent results that's able to play all but the most demanding of games from the last few years. Certainly, you can't compete with the power of a desktop gaming PC, but you can get good enough. And then, with a few design tweaks, you can get a little better.

So, until and unless serious changes happen in the CPU or GPU market, mobile PC gaming has a chance to be good enough for a lot of people. I currently do over 90% of my gaming on the Steam Deck, but I'm also aware that I have little interest in playing the newest game as soon as it comes out so the Steam Deck is particularly suited to my tastes.

"Let" is that the wrong word. Microsoft was setup specifically to make BASIC for the Altair. DOS they stumbled into because CP/M dropped the ball. Every other product, they've been chasing new markets that they didn't think of being in.

I'm critical about Xbox handheld/portable because it was so obvious that that's where the demand would come from.

However, they've been better at monetizing their other software and services better than anyone else though.

My point here is that none of these cases feature Microsoft inventing a brand new product and trying to market it for the first time. Their whole strategy from the very beginning was to look for existing products with existing markets and try to conquer them. They even had a name for a variant of this strategy (targeted at open standards) which the US DoJ famously discovered during the antitrust trial:

Embrace, Extend, and Extinguish.

Anyone that has ever played a game on a phone knew that would never happen.

The Xbox system is a windows based system optimised to run on the consoles hardware. It has been since launch. Modifying it for handhelds with the ability to navigate to a desktop environment. The addition of a desktop environment isn't so difficult that it should take three years to accomplish. They launched windows 11 4 years ago and it didn't take but a few months for them to start shoehorning AI into every crevice of it.

Asus has a product already in production that could be used for the purposes of test bench testing and development. The original ROG Ally is even around the same price point as a steam deck.

So all in all the only two excuses MS has are that they are bad at understanding trends and getting in on the ground floor, and they are bad at optimising windows specifically because that goes against their business plan to gather user data and weaponize that data against their competitors.

All.in all we don't have an Xbox handheld at this point because they're greedy and fail to act on trend analysis.

And failing, apparently

God Microsoft is just taking so many L's. How can they make so much money and be so bad at managing Xbox?

They have no leverage, no exclusive games and their DirectX moat is filled by Proton/Vulkan