Valve confirmed to The Verge this week that it’s working on supporting SteamOS on rival handhelds like Asus’ ROG Ally. It’s a significant move that could mean we eventually see Steam Deck-like devices running on Valve’s custom OS instead of Windows. If Microsoft doesn’t act fast, it could soon find itself in a battle to keep Windows relevant on handheld gaming PCs.

Valve has sold “multiple millions” of its Steam Deck handheld gaming PC. Omdia research estimates that nearly 20 million handheld gaming devices were sold worldwide last year, with that figure expected to grow to over 29 million per year by 2028. Nintendo’s Switch 2 looks set for a 2025 release, Sony’s portable PlayStation device is already here, and there are persistent rumors of an Xbox handheld. While the market is small right now, it’s growing and could potentially replace traditional game consoles for younger gamers who are already used to playing on mobile phones.

Most of the existing rivals to the Steam Deck run on Windows, but it’s not a great experience on handhelds so there’s an opportunity for SteamOS to become an even bigger threat. Microsoft has already been slow to respond to the Steam Deck, leaving Windows in a state that isn’t designed for small handheld-like devices. PC makers like Lenovo and Asus have built their own interfaces on top of Windows to make the operating system feel more handheld-friendly, but this only goes so far. A lot of the core improvements needed to make Windows better on handhelds will have to come from Microsoft directly.