A handheld device with the Xbox name might be releasing this year, but it just doesn't sound like something with the power to shake up the market.

Microsoft’s gaming chief Phil Spencer said that he wanted handheld gaming PCs to feel more like an Xbox. But as the saying goes, if you want something done right, do it yourself. Thus, Microsoft is reportedly working on its own handheld Xbox PC console.

New Xbox handheld reports say Asus, the creator of the ROG Ally line of handheld gaming PCs, is partnering with Microsoft on the project.

I understand the Xbox work that has hit the headlines this week is actually called Project Kennan, not Keenan. I’m told that Kennan is the codename for a handheld that is being manufactured by Asus, and it’s part of a larger effort from Microsoft to unify Windows and Xbox towards a universal library of Xbox and PC games.

Those rumors about Microsoft making it own Xbox handheld may have been hasty, but we could see the Xbox version of SteamOS instead.

ASUS could be Microsoft's partner for the first-ever Xbox-branded PC gaming handheld, and new reports say that a unified Xbox+PC store is top priority.

Sources say that Asus and Microsoft are working together to build the first Xbox handheld gaming console for launch later this year.