Microsoft is bringing Windows and Xbox closer together so you can game anywhere

Microsoft (MSFT) has been slowly bringing its Xbox and Windows brands closer together as it seeks to dominate the future of gaming, both on your home TV and on the go.

Now the company is kicking the effort into high gear with its new ROG Xbox Ally line of handheld gaming consoles. Built in concert with PC maker ASUS, the $599 Ally and high-performance and pricey, $999 Ally X pack 7-inch displays and can run PC games natively or stream them via the cloud. You can also stream games from your Xbox Series S or X.

The move to bring Xbox and Windows to handheld systems represents a shift in the company’s overall gaming strategy, which has, so far, relied on standard home consoles and PC gaming. It also puts Microsoft into direct competition with Valve and its Steam Deck gaming handheld, which is priced between $399 and $649.

Sony (SONY) has its own portable handset, the $199 PlayStation Portable, that lets you stream games via the cloud and your PlayStation 5, but, like Nintendo’s (NTDOY) $449 Switch 2, doesn’t connect to third-party game stores like the Ally. At the same time, both Sony’s PlayStation 5 and Nintendo’s Switch outsell the Xbox Series line.

“It is almost two years to the day since I became the president of Xbox, and one of the first things that I observed was that Windows is the No. 1 platform for AAA gaming, but there was so much more that we could be doing as Xbox with Windows that was completely untapped around the world,” said Xbox president Sarah Bond, who was joined by Pavan Davuluri, Microsoft’s president of Windows and devices, in their first joint interview.

“We just started talking about what we could do that took the power of Windows, its openness, which gamers love … but started to think about things that we could do that made it even better for gaming,” she added.

Which is where the Ally line comes in.

“When Sarah’s team came up with the handheld thing, it gave us an opportunity to just go back to first principles and rethink, given it’s a new form factor,” Davuluri explained. “We know we want to be deliberate about bringing Xbox and the powers of the Windows platform to it.”

That interplay between the Windows and Xbox teams should prove to be a benefit for both businesses.

“A great advantage that Microsoft has over any other game developer, publisher, or hardware provider…except, of course, Apple and Google and a few others, is that they run a major operating system,” explained video game industry analyst Lewis Ward.

“And so there are inherent advantages to being able to integrate … the operating system with the storefront, with the game experience on many different screens,” he added.

Bringing the Xbox closer to Windows should also help drive an increase in Microsoft’s Game Pass subscriptions. Game Pass, which ranges in price from the $9.99-per-month Game Pass Essential to the $29.99 Game Pass Ultimate, gives users access to Microsoft’s library of Xbox PC and console games, as well as cloud gaming via the Xbox Cloud Gaming service.

That kind of recurring revenue model has been a boon for Microsoft’s enterprise and consumer offerings on the Windows side and could do the same for Xbox. And while Sony and Nintendo also have subscription services, Microsoft is positioning Game Pass as its biggest priority.

“This is like a 10-year-plus plan that [Microsoft has had], is looking at Xbox and what that group has been able to accomplish, the direction that Windows … wants to go, and kind of finding the synergies and the places where those two add up to something more than the separate pieces,” said Ward.

“They’re viewing that subscription-based future where you don’t own anything, and it all lives in the cloud … as, from what I could see, their holy grail of where they envision the future of all entertainment going, not just not just games,” Ward added.

And while Bond says her team is already working with chipmaker AMD (AMD) on its next-generation Xbox home console, Microsoft is clearly moving toward a world where gamers can play on their TVs, PCs, laptops, desktops, and smartphones.

“What we’re going for is more play, and that is our opportunity. Right now, the way that gaming works, where it’s all broken up by device stores, we lose that entertainment time to something else that’s more present for people,” Bond said.

“And so we see a tremendous opportunity to say, ‘Hey, it’s not about trying to go get more players, there are as many players that are people connected to the world, but for people who do want to play, let’s create an immersive, persistent experience across all the devices within Windows, so that when you’re with Windows, that is the definitive place that is the home for gaming, no matter what screen you’re on,” she added.

Email Daniel Howley at dhowley@yahoofinance.com. Follow him on X/Twitter at @DanielHowley.

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Microsoft (MSFT) has been slowly bringing its Xbox and Windows brands closer together as it seeks to dominate the future of gaming, both on your home TV and on the go.

Now the company is kicking the effort into high gear with its new ROG Xbox Ally line of handheld gaming consoles. Built in concert with PC maker ASUS, the $599 Ally and high-performance and pricey, $999 Ally X pack 7-inch displays and can run PC games natively or stream them via the cloud. You can also stream games from your Xbox Series S or X.

The move to bring Xbox and Windows to handheld systems represents a shift in the company’s overall gaming strategy, which has, so far, relied on standard home consoles and PC gaming. It also puts Microsoft into direct competition with Valve and its Steam Deck gaming handheld, which is priced between $399 and $649.

Sony (SONY) has its own portable handset, the $199 PlayStation Portable, that lets you stream games via the cloud and your PlayStation 5, but, like Nintendo’s (NTDOY) $449 Switch 2, doesn’t connect to third-party game stores like the Ally. At the same time, both Sony’s PlayStation 5 and Nintendo’s Switch outsell the Xbox Series line.

“It is almost two years to the day since I became the president of Xbox, and one of the first things that I observed was that Windows is the No. 1 platform for AAA gaming, but there was so much more that we could be doing as Xbox with Windows that was completely untapped around the world,” said Xbox president Sarah Bond, who was joined by Pavan Davuluri, Microsoft’s president of Windows and devices, in their first joint interview.

“We just started talking about what we could do that took the power of Windows, its openness, which gamers love … but started to think about things that we could do that made it even better for gaming,” she added.

Which is where the Ally line comes in.

“When Sarah’s team came up with the handheld thing, it gave us an opportunity to just go back to first principles and rethink, given it’s a new form factor,” Davuluri explained. “We know we want to be deliberate about bringing Xbox and the powers of the Windows platform to it.”

That interplay between the Windows and Xbox teams should prove to be a benefit for both businesses.

“A great advantage that Microsoft has over any other game developer, publisher, or hardware provider…except, of course, Apple and Google and a few others, is that they run a major operating system,” explained video game industry analyst Lewis Ward.

“And so there are inherent advantages to being able to integrate … the operating system with the storefront, with the game experience on many different screens,” he added.

Bringing the Xbox closer to Windows should also help drive an increase in Microsoft’s Game Pass subscriptions. Game Pass, which ranges in price from the $9.99-per-month Game Pass Essential to the $29.99 Game Pass Ultimate, gives users access to Microsoft’s library of Xbox PC and console games, as well as cloud gaming via the Xbox Cloud Gaming service.

That kind of recurring revenue model has been a boon for Microsoft’s enterprise and consumer offerings on the Windows side and could do the same for Xbox. And while Sony and Nintendo also have subscription services, Microsoft is positioning Game Pass as its biggest priority.

“This is like a 10-year-plus plan that [Microsoft has had], is looking at Xbox and what that group has been able to accomplish, the direction that Windows … wants to go, and kind of finding the synergies and the places where those two add up to something more than the separate pieces,” said Ward.

“They’re viewing that subscription-based future where you don’t own anything, and it all lives in the cloud … as, from what I could see, their holy grail of where they envision the future of all entertainment going, not just not just games,” Ward added.

And while Bond says her team is already working with chipmaker AMD (AMD) on its next-generation Xbox home console, Microsoft is clearly moving toward a world where gamers can play on their TVs, PCs, laptops, desktops, and smartphones.

“What we’re going for is more play, and that is our opportunity. Right now, the way that gaming works, where it’s all broken up by device stores, we lose that entertainment time to something else that’s more present for people,” Bond said.

“And so we see a tremendous opportunity to say, ‘Hey, it’s not about trying to go get more players, there are as many players that are people connected to the world, but for people who do want to play, let’s create an immersive, persistent experience across all the devices within Windows, so that when you’re with Windows, that is the definitive place that is the home for gaming, no matter what screen you’re on,” she added.

Email Daniel Howley at dhowley@yahoofinance.com. Follow him on X/Twitter at @DanielHowley.

Click here for the latest technology news that will impact the stock market

Read the latest financial and business news from Yahoo Finance