The most notable difference between the Xbox Ally and the Steam Deck is the operating system. Like the ROG Ally, the Xbox Ally will also use Windows 11, while the Steam Deck uses Valve's SteamOS.

Because it sure does borrow a lot from the Deck, especially when it comes to how it categorizes different levels of compatibility, though I would argue Xbox's approach is marginal

Microsoft also revealed details on how game compatibility works for the handheld gaming PCs.