Xbox One X selling at a loss even with that $500 price tag

By Brenna Hillier, Thursday, 15 June 2017 00:07 GMT

Xbox One X won’t make money for Microsoft, apparently.


Xbox One X is an expensive bit of gear, although if you’re the sort to have a 4K display you probably don’t think much of chucking half a grand at a new hardware refresh if it means more pixels on the screen.

But even at $499, Xbox One X isn’t funneling fat cash into Microsoft’s pockets. Speaking to Business Insider, Microsoft’s Phil Spencer offered a simple “no” when asked whether Xbox One X console sales make any money.

Asked whether the console is being sold at a lose, Spencer became evasive – as you would, with shareholders and analysts hanging on every Google alert. What he did say is pretty telling:

“I don’t want to get into all the numbers, but in aggregate you should think about the hardware part of the console business is not the money-making part of the business,” Spencer said.

“The money-making part is in selling games.”

It’s not uncommon for hardware to be sold with a very small profit margin, or at a loss – especially in the early years, as a platform holder recoups design and manufacturing costs. It was four years before PS3 was sold at a profit, and the Wii U was sold at a loss.

That last example is really important, because while the Wii U was never a blockbuster console, it turned a profit if owners bought just one game. Microsoft is unlikely to tell us whether the same is true of Xbox One X, but it’s a pretty safe bet it’s not gambling enormously by selling the console very far under cost price.

As for why the Xbox One X costs as much as it does, well – it’s got the newest components of any console by a fair margin, and it’s a pretty small box, which means its parts are bespoke and expensive to manufacture.

Since Xbox One X, like PS4 Pro, has no exclusives, Microsoft is clearly positioning the new console as a luxury device for well-heeled consumers – not the everyday gamer. That’s why it can say it’s “proud” of the high price of the Xbox One X.

Are you gonna get an Xbox One X? Do you have a 4K telly or monitor?

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