Handheld consoles are the industry's next battleground | Opinion

Only a week or two after confirmation that Microsoft is working on a handheld Xbox device, we now have reports that Sony is also in the early stages of developing a new portable device – its first foray into this market since the discontinuation of the ill-fated PS Vita five years ago.

With a successor to the Nintendo Switch on the horizon and the burgeoning PC handheld space energised by the success of the Steam Deck, it's fair to ask if we're about to enter a new golden age for handheld gaming – a sector that many people wrote off entirely when smartphone games soared in popularity in the 2010s.

The caveat here is that both Sony and Microsoft are in the very early stages of planning their handheld devices, and to some degree both companies appear to be waiting for technology to catch up to their ambitions.

Sony wants its device to be able to play PS5 games, and it's reasonable to assume that Microsoft would similarly want any handheld Xbox to sit somewhere alongside the Xbox Series S in terms of game compatibility.

These are technologically challenging goals, not least because those consoles use PC-like x86 CPUs and AMD GPUs, while much of the advancement that has allowed mobile devices to get so much faster and more efficient in recent years has been focused on ARM architectures.

Nonetheless, we'll eventually reach a point where AMD puts PS5-class hardware in a mobile package. The path is relatively clear, given that the Steam Deck already runs on a scaled-down version of the RDNA architecture that powers both the PS5 and the Xbox Series consoles, but it'll take a while to get there.

Even once we do get there, battery life is likely to be a concern – the Steam Deck isn't exactly great in this department to begin with – and both companies will have to be very careful and clear in defining the use cases for these devices around the potential limitations that will introduce.

Technologically, then, these devices are certainly possible – albeit several years down the line, and with some caveats and concerns that will need to be resolved. Commercially, though, what is the business case here exactly?

There's a more straightforward commercial reason for Microsoft and Sony to go down this route; each of them has a major competitor using handheld devices to gain the upper hand

It was assumed for some time that if Microsoft and Sony were to dip their toes back into the handheld waters, it would be with thin-client devices that tied in to their game streaming offerings – an idea given further credibility when Sony launched the PlayStation Portal, a device exactly in that mould, albeit primarily designed for use within the home, tethered to a PS5, rather than as a genuinely portable console.

What is now being described is quite different; powerful handheld devices that would play games from the PlayStation and Xbox libraries natively, rather than simply streaming them from the Cloud.

This pivot likely owes something to the dampening down of enthusiasm around 5G, which had been unrealistically seen as an opportunity to shift to a streaming-led paradigm for game consumption.

Cloud streaming is instead gradually nestling itself into a niche – an important niche, but a limited one – and shows no signs of taking over from locally-run games as the industry's dominant paradigm any time soon, which is entirely unsurprising considering how rapid the advances in local processing and storage tend to be compared to the relatively modest advances in network speeds and costs.

In the longer term, this trend would inevitably shift attention back to the potential for powerful handhelds rather than thin clients. In the shorter term, though, there's a more straightforward commercial reason for Microsoft and Sony to go down this route; each of them has a major competitor using handheld devices to gain the upper hand.

It's sometimes in fashion to pretend that Sony doesn't actually compete with Nintendo. There's a certain logic to that idea, not only due to the uniqueness of Nintendo's brands and product line-up, but also because historically Nintendo has often thrived as a "second console," a device that consumers would buy alongside their PlayStation or Xbox in order to play Nintendo's unique games.

That idea was always a little overblown despite the kernel of truth at its heart, and in the past generation it's been quite apparent that it's no longer true – Switch has become the primary, and often the only, gaming device for many consumers. That's especially true in Sony's home territory of Japan, and for all that it's often seemed in recent years that Sony has little interest in prioritising Japan as a market for PlayStation, it likely still stings to have lost out so comprehensively to Nintendo in this region.

Switch has become the primary, and often the only, gaming device for many consumers

Nintendo's Switch strategy has been an immense success in Japan, and pretty much everywhere else besides. Merging the company's home console and handheld console businesses into a single device line was a stroke of genius. In the process it opened up a whole set of markets rival consoles just couldn't tap, from people who wanted to play on the go to people who simply don't have a TV available to hook up a console in the contexts in which they want to play.

That can sound daft to those of us whose living room orbits around a central 65" monolith, but more and more households – especially of young people – have laptops, tablets, and smartphones aplenty, but no television. Screens, screens, everywhere – and not an HDMI port to plug into.

PlayStation Portal was in part an effort to reach out to that market, and seems to have significantly outperformed Sony's (probably quite modest) expectations. Its notion of a handheld console that will play PS5 games natively is a more aggressive pitch for much the same market segment, and when it finally arrives will put Sony directly in competition for the same consumers as Nintendo for the first time in many years.

For Microsoft, the competition is more simple and direct. What Nintendo and eventually Sony are doing in the handheld space is of interest to them, of course, but it pales in comparison to the importance of what Valve has done with the Steam Deck.

The sales numbers for Steam Deck are not public – Valve stated last year that it has sold "multiple millions" of the device, but that's as much as we know officially. Nonetheless, and to some extent regardless of actual sales, the Deck has kicked off a wave of handheld PC gaming devices that seems set to reshape that sector of the market.

If the success of the Steam Deck is a key component of that threat, then creating an Xbox device to compete directly in that space seems like the logical response

For Microsoft, the key threat is that the Steam Deck isn't even a Windows OS device by default, let alone having Microsoft's Xbox services and Game Pass on it. Valve has used the platform, very successfully, to evolve Steam from being simply a digital store that runs (usually) on Windows, into being a very capable gaming OS in its own right.

That, perhaps more than anything else happening in the industry in recent years, is a threat to Microsoft's plans for the Xbox platform and gaming more broadly – and if the success of the Steam Deck is a key component of that threat, then creating an Xbox device to compete directly in that space seems like the logical response.

Sony and Microsoft have different reasons for wanting to compete in the handheld space, then, but to some degree they share an ambition – each of them believes that a handheld device will help to expand the reach of their gaming platform.

They also share a technological context; each of them essentially needs AMD to reach the same level of performance and efficiency with its portable versions of the RDNA architecture to make these new handhelds possible. The resulting devices, when they do finally appear – an event for which nobody should be holding their breath – will likely be very similar to one another as a result.

Nonetheless, they will signal a remarkable comeback for the handheld form factor; after being written off only a few years ago, it seems that this is set to be the next great battleground for the industry's platform holders.