The future of the Xbox looks a lot like a PC

When I reviewed the Xbox Series X nearly four years ago, I called the console a “next-gen PC.” Not only did the Xbox look like a PC with its boxy, rectangular, tower-like case but it also felt like one thanks to hardware upgrades that allowed it to run games with a variety of PC-like graphical modes. Now, as we approach the next generation of Xbox, it looks like Microsoft is about to close the gap between Xbox and PC even further.

Microsoft Gaming CEO Phil Spencer has teased some potentially massive Xbox platform changes in recent weeks. At the same time, leaked internal memos have revealed an increased focus inside Microsoft on Xbox game preservation and forward compatibility. When you put all the breadcrumbs together, it feels like we’re about to see Microsoft combine all the good parts of Windows and Xbox for its next-generation console.

Spencer recently said in an interview with Polygon that the Xbox team is thinking about how to open up its ecosystem and embrace PC stores like the Epic Games Store and Itch.io. It’s a radical rethinking of the Xbox console model, and Spencer doesn’t usually tease things like this unless it’s something Microsoft is seriously considering.

To be able to open up the Xbox to PC stores and embrace a more open model, several things need to happen that I get the sense are in motion inside Microsoft. First and foremost, it will need to make the console capable of running PC games.

That doesn’t mean Xbox owners will suddenly be booting into a Windows desktop with a Start menu and pop-up ads for Bing, but it could mean that a future Xbox console would lean more toward the PC side of game development. Microsoft has been trying to bridge this development gap for years, with projects like GameCore, a method that makes it easier for developers to package up games that use both Xbox and PC services and run as container-based apps.

While Microsoft has promised “the biggest technical leap ever in a generation” for its next Xbox console, the company has also set up a new team dedicated to preserving existing Xbox games. “We are building on our strong history of delivering backwards compatibility to our players, and we remain committed to bringing forward the amazing library of Xbox games for future generations of players to enjoy,” Xbox president Sarah Bond wrote recently in a leaked internal memo.

This feels like a team being set up to transition away from the idea of Xbox and PC games being two separate things, while also ensuring that existing games continue to run on future consoles that adopt this new way of operating. It would open up the Xbox to run a lot more games and make it easier on developers.

Microsoft opening up its Xbox console to rival PC stores comes with some risks and rewards, but it shouldn’t come as a surprise. Two years ago, Microsoft said it was committed to opening up its Xbox platform to the app store principles it put in place for its Windows app store, which allows developers to use alternative systems for in-app payments. “We will build our next-generation game store based on these new principles,” said Microsoft president Brad Smith at the time.

If Microsoft does go down this road, opening up the Xbox platform will dramatically shift the economics of Xbox console hardware. Microsoft typically sells its Xbox consoles at a loss that it recoups through sales of games. If rival PC stores are on an Xbox, then subsidizing hardware gets far more complicated and could lead to more expensive consoles.

Spencer admitted in an interview with Polygon recently that subsidizing hardware is “more challenging in today’s world” of pricey components and a lack of overall console market growth. “So I think, what are the barriers? What are the things that create friction in today’s world for creators and players? And how can we be part of opening up that model?” asked Spencer.

Opening up the underlying model of Xbox to be more PC-like could also enable third-party Xbox consoles in the future. That doesn’t mean Microsoft will walk away from Xbox hardware, but if it’s doing lots of software work to open up its platform and make it easier for developers to build games, then why not extend that to even more hardware?

All of these potential Xbox platform changes will also apply to handhelds, and I think this is a big part of Microsoft’s overall thinking here. Valve has shown that the Steam Deck is a viable console, years after it tried and failed to make Xbox-like Steam Machines a reality. The Steam Deck is powered by a custom Linux OS that utilizes Proton, a compatibility layer for Windows games to run on Linux. Proton has been key to making Steam Deck a success because, without it, developers would have to do a lot more work to port their games to Linux.

Microsoft is rumored to be working on an Xbox handheld, and while I’m not expecting the traditional next-generation Xbox console to run on Arm-based chips, I think they make a lot more sense in an Xbox handheld form factor. For an Xbox handheld to be successful, it will have to leverage the strengths of Windows and Xbox in a smart combination.

On The Vergecast, I recently discussed my ideal for an Xbox handheld. It would run Windows at its core but never expose this to you so it looks and feels like an Xbox console, but if you want to run Steam games or Xbox games, you can. Microsoft has the ability to run the Xbox OS on Windows and has experimented with doing exactly that in the past.

The Steam Deck might have only sold a few million units so far, but it represents the biggest threat to Xbox consoles and Windows-based PC gaming ever. Valve has managed to create a console-like experience for PC games, and it has access to all of the best Xbox- and PlayStation-exclusive games through its Steam store.

Microsoft’s response to the Steam Deck has been muted so far, but the company has formed a new Xbox Experiences and Platforms team that will help improve the Windows experience on handhelds.

“I want to be able to boot into the Xbox app in a full screen, but in a compact mode,” said Spencer recently, discussing handhelds in a Polygon interview. “Like I want it to feel like the dash of my Xbox when I turn on the television. [Except I want it] on those devices.”

If Microsoft can pull off merging Xbox and Windows together, it might truly achieve its “Xbox everywhere” vision — the idea that every screen is an Xbox.