The handheld gaming market is currently in a complex state.

When people discuss handheld devices today, they usually mention three main contenders: the Nintendo Switch, the Steam Deck, and to a lesser extent, Android. While having new competition in this sector is generally beneficial, devices like the ROG Ally are entering an emerging but somewhat peculiar market.

Nintendo sought to expand its dominance in the handheld gaming space following the success of the Game Boy. After a stumble with the Wii U, they introduced the Switch, a hybrid console that could be used both as a handheld device and connected to a dock for TV gaming. The Switch achieved tremendous success, attracting players of all ages who were eager to experience Nintendo's games. It was affordable, user-friendly, and portable. The early days of playing Mario Kart in bars were truly groundbreaking.

However, the Switch now finds itself in an awkward position. It was launched in 2017, and despite a few minor updates and the introduction of the handheld-only Switch Lite, it is in dire need of an upgrade. The Switch was never known for its graphical prowess, as Nintendo prioritized innovation and gameplay experience over raw power. Nevertheless, it has fallen behind modern machines to the point where it struggles to compete. The latest model, the Switch OLED, released in 2021, did not bring significant performance improvements over the original 2017 version. While it now features a vibrant OLED screen, it still relies on the outdated custom Nvidia Tegra X1 chip. Consequently, it delivers suboptimal performance in contemporary games like Pokémon Scarlet and Violet.

Admittedly, Nintendo has never placed great emphasis on graphical capabilities or cutting-edge components. Their focus has always been on creating unique gaming experiences. Nonetheless, the company is now feeling the pressure to release new hardware. Recent financial reports indicate that overall Switch sales declined by 22% during the last fiscal year. While OLED models experienced a 59% increase in sales, it is evident that the Switch's financial success has reached its peak and will continue to decline unless new hardware is introduced.

In 2021, the Steam Deck entered the market, several years into the Switch's life cycle, and it has achieved a degree of success within its niche category. Although Valve has not disclosed official sales figures, technology analytics firm Omdia estimates that the Steam Deck is on track to sell 3 million units. The Steam Deck, along with other similar devices, will never reach the sales numbers of the Switch, which sold 8.2 million units between October 1 and December 31, 2022, and has sold a total of 122.5 million consoles throughout its lifetime. This discrepancy is to be expected since the Switch and Steam Deck belong to different categories. Furthermore, the Steam Deck is pricier, with the highest-tier model costing $649, and it does not offer exclusive titles.

Then there is Android, which not only powers systems like the Logitech G Cloud but is also available on people's smartphones. Android and iOS devices now provide a relatively inexpensive and straightforward way to access games beyond those available on traditional app stores, thanks to cloud streaming services like Xbox Game Pass Ultimate and Nvidia GeForce Now. Additionally, remote play capabilities allow users to directly play games from their Xbox Series X|S or PS5 consoles as long as they are on the same Wi-Fi network. All one needs is either touch controls or a separate controller (Sony's Project Q appears to be an accessory specifically for using PS Remote Play), enabling the ability to play a wide range of games directly on their smartphones, albeit with potential latency or connectivity issues.

In fact, many dedicated gaming devices, such as the G Cloud and the Razer Edge, are essentially tablets with game controllers attached to the sides. The Razer Edge, for instance, is a 7-inch tablet that comes with the Razer Kishi attachment. Given this, one might question the need to spend $600 on a Razer Edge with 5G when they can simply invest $100 in a Kishi to use with a phone they have already spent $1,000 on.

"These devices are clearly aimed at different audiences. Though, they encounter their own set of challenges. Enthusiast mobile gamers are satisfied with their existing devices and controller peripherals, while more casual mobile gamers may not even consider purchasing such devices," commented McWhirter.

Is it possible for these products to transcend their niche status?

Currently, there is a growing market for new handheld gaming devices. While companies are showing interest in this space, the market remains fragmented, lacking a significant impact on the industry as a whole. For most people, the Nintendo Switch remains the top choice in handheld gaming, while the Steam Deck (and possibly the ROG Ally) caters to PC gaming enthusiasts. Additionally, there are Android-based devices with mobile controller accessories, targeting different consumer groups.

Despite the buzz surrounding products like the Steam Deck and the ROG Ally, it's important to remember that they are still niche products. They cater to a specific audience and go beyond the expectations of the average consumer. These devices primarily appeal to individuals with extensive PC game libraries or subscriptions to cloud gaming services across multiple platforms. Alternatively, they may attract those who are willing to invest time in software customization.

This is particularly true for the ROG Ally, which operates on the Windows operating system. While Microsoft has made efforts to optimize it for touchscreens, it remains an OS primarily designed for desktop and laptop usage. On the other hand, Valve has had years to refine SteamOS, allowing for native compatibility with Steam games through its Proton compatibility layer. Unless users seek advanced customization options, there is no need for extensive tweaking.

Furthermore, these devices come with a hefty price tag. The cheapest Steam Deck model starts at $399, but the highest-selling variant is the 512GB version. As for the ROG Ally, although a less expensive model is expected to be released, the launch price is set at $700. Additionally, they are not available in traditional retail stores or on popular online platforms like Amazon. Currently, the Steam Deck can only be purchased directly from Valve, while the ROG Ally aims to change this by becoming available at Best Buy in the U.S. and Currys in the U.K. (It is speculated that Valve will adopt a broader retail strategy for the Steam Deck 2.)

Nevertheless, the Steam Deck and the Switch have laid the groundwork for the future of handheld gaming. As we move forward, we can expect to see numerous Steam Deck alternatives that draw inspiration from these devices while introducing unique features or improvements.

"Valve is likely to embrace new options and growth in this field, as it has positioned the Deck as a reference device to expand the market and nurture this emerging product category, much like how Microsoft's Surface paved the way for 2-in-1 hybrid PCs in the PC industry," explained McWhirter.

Even if Asus manages to address the performance issues of the ROG Ally or if the Steam Deck improves in its subsequent iterations, it is unlikely that these devices will appeal to mainstream gamers. However, they will undoubtedly contribute to the overall advancement of the handheld console market, especially if more manufacturers enter this space. While it may remain a niche market, it will still have widespread appeal among many individuals. Only time will reveal if it can expand beyond its current boundaries.