This will probably be the biggest competition the Steam Deck has within the handheld PC space.
Most noteworthy is that windows is finally focusing on providing a decent handheld experience, including booting straight to a controller friendly interface, and reducing background processes for better fps and battery.
Edit: The handheld Xbox UI will.come to all windows PCs, but it’s not clear if the reduced performance bloat version will be available. It sounds like only Xbox branded devices may get the full benefit of optimized windows.
It’s also the ugliest handheld PC yet (imo), but I can appreciate that they’re pushing for comfort over looks.
There’s two versions of the Z2E, the one that is labelled “AI” has an NPU. More than any LLM crap, those NPUs can be really good for local ML features that increase accessibility for people. As for how well that’ll be supported on Linux, I’m not sure.
On the point of* your edit, MSFT have said that it’s going to support third-party stores directly in their game interface. I think it’s fairly unlikely that they’re going to break from their already exisiting Xbox controller input scheme. They already have a monopoly there, even third-party devices like the Legion Go use the Xbox layout and input scheme.