Microsoft has always struggled to cement their identity in the gaming space. They've had a lot of projects that either never took off or never made it out of production. The current head of the Xbox division, Phil Spencer, recently talked about two projects that ended up on the cutting room floor.
Gamespot picked up choice quotes from an interview that Spencer had with Gamasutra, where he talked about a USB-style game-streaming stick you could take with you and another handheld device that would have allowed you to play Xbox games on the go. However, at the end of the day, Microsoft decided to stick with what they knew best, and that's gaming on the TV...
In a way, they still managed to bring the streaming concept to life, just not in a portable format. Very similar to Valve's Steam Link, Microsoft ended up making it where you can play Xbox One games via in-home streaming using the Xbox app on a Windows 10 machine. If you have an Xbox One, a game installed, an adequate Windows 10 machine and the Xbox app, you can actually stream games from your Xbox to your PC.
Of course, in-home streaming is still a far-cry from mobile gaming or a portable device that you can use to play your Xbox games on.
Spencer noted that right now they would rather focus on the television ecosystem as opposed to trying to chase after the mobile crowd. It's a smart decision really. Not many companies have found major success in the mobile space. Despite having more than a billion potential customers at their disposal, the reality is that it's extremely difficult to tap the casual market. Exposure, accessibility and pricing all play a major factor in winning over the casual market both in the home and in the mobile space.
Spencer did praise Nintendo for seemingly finding a home run in the form of the Nintendo Switch, which has managed to capture both the hardcore and casual market with its easily accessible content and design and its ability to allow gamers to play on their TV and take the Switch with them when it's time to go out.
There have been many reports in the past that Microsoft was working on a handheld, but it never really came to fruition. The reasons for the portable machines never taking off were never really discussed, but I imagine it was more of a software availability problem than a hardware issue. Microsoft has always had an issue with their first-party line-up of games, and you need strong software to move hardware, which was proven with The Legend of Zelda: Breath of the Wild nearly having a 1:1 software attachment rate to the Nintendo Switch.
Microsoft's big focus right now is on the home television space and getting out their 4K and 60fps machine, Project Scorpio. Maybe if they can finally conquer the television space we'll see them attempt something in the portable handheld market.