Microsoft’s Xbox chief, Phil Spencer, has been dropping hints about a potential Xbox handheld for months now. Earlier this year he said he was “a big fan of handhelds,” after liking posts on X that mention the possibility of this new hardware. Now, in an interview with IGN Spencer says “I think we should have a handheld, too.”

It’s the biggest hint yet that Microsoft is working on an Xbox handheld, something that’s been long-rumored. “The future for us in hardware is pretty awesome. The work that the team is doing around different form factors and different ways to play, I’m incredibly excited about,” said Spencer. “Today was about the games… but we will have a time to come out and talk more about platform.”

Pressed on whether an Xbox handheld would stream games or play them locally, Spencer dropped a further hint that Microsoft is looking at a true handheld gaming device rather than something like the PlayStation Portal. “I like my ROG Ally, my Lenovo Legion Go, my Steam Deck. I think being able to play games locally is really important,” said Spencer.

Earlier this year Spencer talked about wanting a compact Xbox mode on a handheld gaming PC. “I want to be able to boot into the Xbox app in a full screen, but in a compact mode,” said Spencer 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.”

I suspect what Microsoft is working on is an Xbox handheld that’s Windows-based, but that has the ability to run Xbox games and the full Xbox dashboard. On The Vergecast earlier this year, I 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.