Alot depends on if they are going to mandate ports next gen or not. If devs are forced to make ports for both this rumored hybrid dockable handheld and the home console, then the specs on the handheld need to be as high as possible so as not to handicap development on the much faster home console. 

However, if the dockable handheld doesn't have a port mandate and devs can choose whether or not they want to port a game to it, then I think Xbox could go with somewhat lower specs for a cheaper price tag.  Design the specs high enough to play the Series S versions of games on back compat, so that it could run the full 360/XB1/XSS BC library, as well as allow a Steam install on the handheld's stripped down Windows based Xbox OS, so that gamers can get any older games in their Steam library to run on it. That older gen game support through both Xbox Back compat and Steam should be enough game support when combined with whatever optimized handheld ports of games devs decide to release on Xbox store. 

Partially going to just copy what Ryuu said, partially going to address other parts of the porting stuff.  

As Ryuu said, there are studios out there to handle porting. Nixxes was originally a studio that Square Enix would give projects to, to put their games on PC. There are a bunch of different studios that handle porting. Iron Galaxy, Jetpack Interactive are a couple off the top of my head.

A lot of game engines today also make it relatively easy to port the game to other platforms. 

Porting costs a tiny fraction of a new game. It's not a question of make a new game or port. It's a question of "should we spend an extra $3 million, and put the game on twice as many platforms and maybe bring in double what we would have made otherwise"

This is very cherry picked. 

Porting didn't hurt any of these games. I think porting has been very positive for Minecraft, Sea of Thieves. Porting has benefitted the Age of Empires community on Xbox. 

These other games for various other reasons had issues and didn't get the traction that older titles had. 

I don't fully understand what went wrong with Forza or Halo Infinite. I got the impression that some of Halo's management was spread too thin. Bonnie Ross was doing like 3 different jobs, and I can't imagine that was a good thing. 

Anything is possible. It's all about how much is MS willing to devote resources to make it a buttery smooth experience. 

Because if they want to have a dual boot OS handheld, then it has to be so straightforward that a caveman can do it. Setting up dual boot usually requires some level of technical expertise. 

Microsoft have pretty much nailed releasing premium feeling hardware so a Series Y Handheld could be pretty great. But just like the Switch, playing games on handheld isn’t a reason to buy one over the actual library. It’s going to have to have games I can’t play on another device and are actually good for me to even consider it.

As the dust has settled (until Thursday), I came to realize it doesnt matter to me anymore what Xbox does in the future. After 10 years of waiting for things to get better, I'm jumping ship.

I won't buy any Xbox hardware and games anymore. Just going to use Gamepass now and then.

Xbox puts the lowest effort in Europe and localisation of the big three. This is getting worse each and every year. Also, all my friends switched to Switch and Playstation nowadays. I'm the last one still playing on Xbox.

I hope they go completely multiplatform.

Yeah, that thought did cross my mind when I was typing my previous post. MS could just make the Xbox handheld its own thing that has its own games. Would be a bit of a gamble compared to just making something that acts like a companion to the Xbox console hardware though.

Unreasonable....Then why did it take 3 months to port BG3 to xbox series?

Larian ran into some kind of issue when porting. It sounds like a skill issue on their part considering MS had to get some of their staff to help port, they didn't seem to have any trouble porting it to PS5. 

You say porting has been positive for Minecraft....Sales sure but at the same time we have people complain in this thread that some updates like the 4K/Ray tracing did not come to Xbox series because of other platforms?

Sea of thieves was available day one for pc.....

Age of empires, those games did not really benefit xbox gamers considering they were released on PC first and then Xbox later.  

Well to be fair PS4 was also delayed but only for a short time.   My point, porting is not hard but certainly not easy. At best it just cost money, at worst it will cost time..