I have some questions there.

1. hHs that even ever been so much as rumored? There were leaks from various suppliers hinting at the Deck and Switch long before they were in develop. It's possible I missed something, or possible they just haven't leaked anything, but so far I don't have a reason to think they would be trying to enter that space.

2. Microsoft seems to be abandoning that space. The Windows phone died ages ago, and the Surface seems to be languishing.

3. Operating System. Would it be windows? There are already plenty of handhelds that run windows, and usually the biggest problem people have with them is that windows sucks for that application and they replace the OS. Would they have a custom OS like the Xbox? What would it bring to the table that Steam LS doesn't? Valve already put in a ton of work to get Steam OS as good as it is- would Xbox/Microsoft do that too? If it just uses Steam OS, what does the hardware bring that differentiates it from the Deck?

4. Software. I don't know what the unit cost of a Deck is, but I'm guessing it's pretty close to the sales price. The Deck does not need to be a profit center for Valve as long as it drives software sales on Steam. The Microsoft store has already failed- would an Xbox store on such a device manage to be profitable? Would it be locked down and incompatible with Steam? Maybe they could partner with Epic to compete? I'm just having a hard time seeing Xbox/Microsoft enter that business model.

What might be more likely is something like the Portal or G-Cloud. An ARM-based, lightweight product designed to be used for cloud gaming with GamePass. Maaaaaybe some local streaming from your PC or Xbox too. Even with that they would be competing against other products and pretty much every smartphone and tablet. There might be room to move some units, but similar to Sony I don't see that being huge.