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Yesterday, Microsoft confirmed that it's not abandoning the home console market just yet. In a short video teaser, Xbox President Sarah Bond highlighted a "strategic multi-year partnership with AMD" that will include "our next-generation Xbox consoles in your living room and in your hands." But while we know that the "in your hands" part will include devices like the Windows-powered ROG Xbox Ally, there are still few specifics about what exactly Microsoft has planned for its future living room consoles (aside from what Bond calls "the next generation of graphics innovation").

Reading between the lines a bit, though, we wouldn't be surprised if Microsoft was getting ready to finally tear down the thinning wall separating gaming PCs and gaming consoles. A Windows-based, living room-focused Xbox capable of running generic Windows games could accentuate Microsoft's strengths in PC gaming while papering over many of the company's recent struggles in the home console market.

WindowsBox

The once-bright line separating PC gaming and TV-based console gaming has been deteriorating for years. On the hardware side, bespoke console chips and development environments long ago gave way to PC-like architectures that are simpler and easier for developers to work with. And on the PC interface side, efforts like Steam's Big Picture mode and SteamOS as a whole have strived to make playing on a PC with a handheld controller into a more console-like experience.

If handheld players would dig this kind of Windows gaming experience, why not home console players?

Credit: Microsoft

Last week's announcement of the Asus Xbox ROG Ally shows that Microsoft is leaning into this merger. The Windows 11-powered device promises to replace Windows' desktop icons and taskbar with a new full-screen "Xbox Experience for Handheld." The company says this will "minimize background activity and defer non-essential tasks" that take up RAM and computing resources on a full desktop Windows OS. That interface won't be exclusive to Asus' handheld, either; Microsoft has said it will start rolling out to other Windows devices "starting next year."

It's not ridiculous to think that the next Xbox console could be one of those Windows devices. A living-room-focused box running a modified version of that Xbox Experience for Handhelds (call it the "Xbox Experience for Consoles," if you like) would give living room gamers instant access to tens of thousands of games designed for Windows—plus thousands more coming out each year—with an interface and form factor familiar to living room gamers. That kind of software library would give a Windows-based Xbox an instant leg up on the more limited selection of ports available on competing consoles, especially if it also "maintains compatibility with your existing library of Xbox games," as Bond promised.

While Microsoft would likely build its own Windows-based Xbox hardware, it could also license its new console-ified Windows gaming interface to other hardware manufacturers interested in similar living room hardware. Microsoft is well-positioned to run a redo of Valve's abortive Steam Machines effort, only this time without the performance headaches and limited library of Linux ports that plagued that effort.

True, a Windows-based Xbox console would mean Microsoft giving up the ability to charge third-party developers a 30 percent fee for the privilege of offering software on its current walled-garden console marketplace. And competing gaming PC manufacturers that currently partner with Microsoft might not be too happy with the Windows-maker encroaching on their space. But that all might be worth it to help cement Windows—and, in turn, Microsoft—as a central part of the home console gaming space.

Reviving the brand

A Windows-powered living room Xbox is just the kind of thing Microsoft needs to turn around its struggling home console brand. The Xbox One was outsold handily by Sony's PS4, and sales of the Xbox Series S/X hardware have been cratering in recent years. Seemingly acknowledging this, Microsoft has started offering previous Xbox console exclusives to other platforms, giving up the potential of system-selling exclusive games for the prospect of more software licensing fees.