http://www.ign.com/articles/2016/07/22/xboy-handheld-was-considered-says-former-xbox-exec-a-ign-unfiltered

During the early days of Xbox, Microsoft considered competing in the portable space with a dedicated gaming handheld of its own, but ultimately scrapped the project.

Former Chief Xbox Officer Robbie Bach recently stopped by the IGN office and discussed the company's early plans for a handheld (often referred to as "Xboy") on the latest episode of IGN Unfiltered (airing next Tuesday), saying that while he doesn't remember it ever getting to the prototype stage, "there were definitely drawings."

In fact, plans for "Xboy" came up as a project "multiple times" at Microsoft, with Bach noting that "it wasn’t always called Xboy," though, the hypothetical handheld was always called "X something." While the company felt as though they needed to "play in that part of the ecosystem," he said the device never came to fruition "because we just couldn’t focus. We just did not have the bandwidth."

Fortunately for Microsoft, the decision to focus all its efforts on the console market worked in its favor, as smartphones soon took over the mobile scene. "For us it was a focus issue and as it turned out strategically it was a smart decision, but that’s somewhat accidental," Bach said.

In hindsight, the former Xbox boss believes he was proven correct in that "focusing on 360 was absolutely the right thing to do," but also "lucky" because smartphones took over that marketplace.