Knowing microsoft it will be some locked down proprietary bullshit. The reason the steam deck is successful is because it’s wide open to do with as you please from the get go.
Forgetting the impending branded PC based console…
It will be interesting to see how MS/Xbox handle a handheld console. They have such an opportunity here, but it will be easy for them to squander.
What they might do: Another Xbox "branded’ PC gaming handheld with no xbox game compatibility except for streaming xbox games. This would be a loss and might only peak mild interest, depending on what UI/wrapper they use to launch games and how seamless it makes the process. I dont have faith but hey… Valve did it.
What they should do: At least - it should play native xbox games and be backwards compatible like a series s, just mobile. It also needs the ability to dock to a TV like a steamdeck. Thats it. These things would make the console viable imo. Bonus - if it has any pc game compatibility whatsoever.
The Big issue: Clearly microsoft likes money, and their subscriptions are what make them their money. Seemingly, xbox would like to merge their PC and XBox libraries to be playable on one device which would make them much more desirable and competitive in the gaming space… What is preventing that most of all, is subscription based multiplayer.
I dont see how xbox could ever give up that huge subscription base to appease fans and achieve parity between console and PC with free multiplayer. I also dont see them having success charging players to play multiplayer PC games on an xbox console, not with their current market share. Having both multiplayer models exist on one device would be convoluted and sure to enrage users.
Logic then leads me to the only real conclusion… Xbox games will remain locked behind subscription models and consoles with subscription based multiplayer.
Imo releasing a PC-native-games only handheld is what will prevent the success of the handheld. We will see how Xbox plays their cards, but odds are they make some short-sighted financial decisions here that handicaps their reception, as usual.