Sources say that Asus and Microsoft are working together to build the first Xbox handheld gaming console for launch later this year.

I understand the Xbox work that has hit the headlines this week is actually called Project Kennan, not Keenan. I’m told that Kennan is the codename for a handheld that is being manufactured by Asus, and it’s part of a larger effort from Microsoft to unify Windows and Xbox towards a universal library of Xbox and PC games.

It took a few years of dealing with poorly optimized handheld PCs, but Windows Central reports Microsoft may finally be working on an Xbox handheld. The company could announce an Xbox-branded portable device as early as this year,