PC makers like Lenovo, Asus, and MSI have all opted for Windows-based handhelds so far, but as consumer patience with Windows on tiny screens wears thin and Microsoft’s progress in improving the experience is slow, it seems like OEMs are looking for a better alternative.
Microsoft hasn't make any progress on improving the experience because the Windows UI is simply not suitable for non-mouse environment, and you are not allowed to sell a Windows device that doesn't provide the Windows OOB experience.
Linux is the only sane choice with restrictions like that.
They're not trying to iterate improvements, I would put money on them presenting an overhauled dedicated gamepad interface in the next 18 months. That's still glacial speed, but that's what happens when you're a nearly 50 year old company of that size.
It's not even like Linux is that much better in terms of UI/UX but being able to control the user experience with fine grain controls the way it's done on SteamOS/other distros is a massive advantage. All other Windows handhelds are stuck with some poor imitation of a gamepad-compatible shell.
I use gnome for my desktop experience and only when using the terminal or web browser do I have to use a keyboard and mouse. It's not Android levels of perfect for touch screens, but it's miles ahead of windows 11.
They have in fact gone backwards. Using windows 10 on my work surface in tablet mode is much preferred to the windows 11 BS involved in my ROG Ally X or the Lenovo Legion Go (which I'm gifting to my sister for Christmas). The Legion Go has a better screen but it's still not great because windows 11 really isn't made for tablets and they have regressed on tablet support despite selling a whole line of them.