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Microsoft is the only one of the major console manufacturers not to have a handheld system. We now know why thanks to a recent interview given by former Xbox boss Robbie Bach.
The interview with GeekWire is a fascinating read about the ins and outs of what went down during Bach's tenure at Microsoft and helping make the Xbox brand a globally recognized name in the world of tech and entertainment. However, when asked why an "Xboy" – a handheld rendition of the Xbox – never came to be, Bach simply explained...
I think in hindsight, we made a really great decision. We didn’t make it because we were smarter than the other guy. We just made it because we had big problems to deal with on Xbox itself.
Previous to this question Bach explained how one of the best decisions that the team double-downed on was adding in an Ethernet port to the OG Xbox, which eventually paved the way for broadband console gaming when games like Mechassault came onto the market and Xbox Live blew up in popularity.
Bach also attributes the OG Xbox and the entirety of the Xbox brand's success to three things: Xbox Live, Halo and persistence. I agree on all three points.
Xbox Live was the reason Sony got serious about the PlayStation Network and had Nintendo stepping up their game with the Nintendo Network. But as Bach mentioned, even with competition from the Nintendo 3/DS/XL and PSP or PS Vita, Microsoft wasn't compelled to enter the handheld gaming market.
Bach further states that the portable gaming market is no longer viable...
Smartphones took that market away, so we focused on the thing that survived and did well, and continued to grow. Some skill in navigating strategy, and making priority choices, and some luck in how the market went.
I don't really think the smartphone market took it away, it just offered people more options than what a dedicated handheld brings to the table. Core gamers still consume Nintendo's portable exclusives like Pokemon and Animal Crossing like crazy, and Pokemon still regularly outsells major AAA console releases. The market isn't gone, you just have to know how to tap it.
It's understandable, though, that Microsoft would rather focus on the home console market instead of chasing after the very difficult portable sector. Sony hasn't had much success with the PSP or PS Vita in that regards, but Nintendo has really found their way with the various iterations of the Gameboy, the DS and the 3DS.
At this point Microsoft has opted to forgo dedicated portable gaming and instead focus on bridging together smart devices, Windows 10 desktops and the Xbox One software ecosystem.