I'm not sure that's a great example of quick-pivot defensive decision-making on Microsoft's part. It was just a leaked slide deck of a hackathon project done by a few employees. If the project actually gets greenlit and shipped, that's another thing.
Microsoft has often been good at the Vaporware / stall approach. If a competitor/underdog looks like they're getting traction, announce something similar even if it isn't available for a long time (or ever). If you can stall adoption for a few quarters you can catch up to or kill a competing product. Sigh.
How is that going to help Microsoft here? You can build games that work with both windows and the steam deck. Why wait for Microsoft's handheld device?
