Microsoft has never made a profit selling Xbox consoles. And it looks like the Xbox One X won’t be an exception to that rule.
As you may recall, Microsoft priced the Xbox One X at $500, or about $100 more than its only real competitor, the Sony PlayStation 4 Pro. This price point is controversial in some circles, mostly because people don’t understand how much it costs to design and build hardware this powerful. But as I noted earlier this week, the $500 price point is a reasonable, if premium, price tag for a device this capable.
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So this week, Business Insider asked Microsoft’s Phil Spencer if the firm would make a profit selling the Xbox One X at $500. This is a curious question, in a way, because console hardware is always sold at a loss initially. (And in Microsoft’s case, it never actually turns a profit on Xbox consoles, despite rounds of cost reductions in each generation.)
But Spencer spoke plainly, which is one of the things I like about him and the Xbox team these days.
“No.”
So that sounds clear enough. But then the publication pressed him to clarify, asking is Microsoft was “taking a loss.”
“I didn’t answer it that way,” he responded. Probably irritated. “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. The money-making part is in selling games.”
Put simply, the Xbox One X is full of expensive components, which makes sense, since it is the most powerful video game console ever made. Will the price of those components come down over time? Of course. But then it’s reasonable to expect that Microsoft will likewise lower the cost of the Xbox One X for consumers in order to open it up to a wider audience.
In other words, Microsoft will never turn a profit on the Xbox One X hardware. Because they never do.
New technology is expensive. Fortunately, we also have options, and if you don’t want to live on the bleeding edge today, or simply can’t afford the price, you can always turn to the incredibly affordable Xbox One S. Obviously.
Stooks
<blockquote><a href="#125865"><em>In reply to CaedenV:</em></a></blockquote><p>I am going to upgrade my Xbox One original with a X and it will be connected to a 1080p gaming monitor. Everyone has their reasons. I want a faster console. My games will go faster. They will not dip into dynamic resolution mode as often if every at 1080p and that is un-patched. If patched at 1080p I will get those same speed bumps plus better graphics, like supersampling.</p><p><br></p><p>I have a gaming PC, a really fast one and games look and run great on them. That said in the MP games I like to play (all multi-platform) the cheating is destroying the experience on the PC. BF1 is a perfect example. I am hoping the X closes the graphics gap, not totally, but enough and gets rid of the cheating or 98% of it.</p><p><br></p><p>https://www.youtube.com/watch?v=VdGV1jT7e0E&list=WL</p>
Stooks
<blockquote><a href="#125889"><em>In reply to DocPaul:</em></a></blockquote><p>How did that work out for them with the Wii U?</p>
Stooks
<blockquote><a href="#125895"><em>In reply to Jester:</em></a></blockquote><p>The devil is in the details. </p><p><br></p><p>You can probably make any game work at 4k just by setting the graphics to low quality. </p><p><br></p><p>For medium/high quality graphics settings then you many get native 4k on games that are less demanding, like a racing game (Forza) or for a more demanding game you will need to employ some tricks, like checkerboarding or dynamic resolution.</p>
Stooks
<blockquote><a href="#126040"><em>In reply to JudaZuk:</em></a></blockquote><p>Please don't let facts get in the way :)</p><p><br></p><p>I have read that the GPU is more in line with a 570 or 1060 in terms of power…..so please up the price of your PC parts!</p><p><br></p><p>Also it is never just about the power of the PC. PC games are never optimized to the metal like a console game is because a end user might have all kinds of different hardware, OS versions, patch levels, driver levels etc. Where everyone on the Xbox One has the same OS, patches and drivers, with two known hardware configurations. Same for the PS4.</p><p><br></p><p>The other thing never brought up in the PC vs console rants is the cheating. Cheating is so utterly horrible on the PC on the multiplayer games. Just google for cheats on our favorite PC multiplayer games. There are whole companies with web sites and youtube channels showing how their cheats work. You buy them and there is nothing illegal about them. They come with simple GUI's to pick which cheating features to enable. The game makers can't fight them and have given up in many cases. Since any software can be installed on a PC it is impossible to fight this. In BF1 on the PC it so out of control it has ruined the game. With each patch you get a day or two of normal gaming before the patches are updated. You also see many names getting kicked from the servers because the new patch detects the cheats for a few days.</p><p><br></p><p>On the console you can hack it but it is so much harder and about 98% less prevalent than on the PC. The gaming experience for a popular multiplayer game is just better on a console today. </p>
Stooks
<blockquote><a href="#125927"><em>In reply to Waethorn:</em></a></blockquote><p>Is that before after they sold off 3/4 of the company?</p>