Microsoft has needed to respond to SteamOS ever since the Steam Deck launched three years ago, and it has steadily been tweaking its Xbox app and the Xbox Game Bar on Windows to make both more handheld-friendly. But there was always a bigger overhaul of Windows required, and we’re starting to see parts of that today.

Asus makes heavy revisions to the Ally for a new Xbox-branded model, though it's still running Windows 11 underneath. Two versions will launch at the end of 2025.

If gamers can have a slimline version of the OS, why not IT admins? Microsoft just demonstrated it can put Windows 11 on a diet if it really wants to, with the announcement of PC gaming handhelds running a slimmed-down version of the operating system under the hood.