Xbox One X selling at a loss

Despite $499 price tag, Microsoft's new console is still “not the money-making part of the business”

Microsoft will see a loss for every Xbox One X unit it sells.

This was confirmed to Business Insider during an interview with Phil Spencer, who simply said "No" when asked if the platform holder would make any money from sales of its upcoming console.

Oddly, when asked if that means Xbox is taking a loss, he answered: "I didn't answer it that way."

He later elaborated: "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."

This is not necessarily a ground-breaking, shareholder-angering revelation. Both Microsoft and Sony have historically sold their consoles at a loss with the intention of offsetting this with sales of games and services such as Xbox Live.

However, with a hefty price tag of $499 - something analysts have told makes the console a "tough sell" - you would have hoped Microsoft would be recouping some of its costs.

Notably, Nintendo rarely sells hardware at a loss - with the troubled Wii U being a significant exception. However, even then Nintendo of America president Reggie Fils-Aime assured that each unit sold becomes profitable if consumers purchase just one game with it. It's not clear whether something similar can be said for Xbox One X.

The $499 price, while high, is somewhat understandable given the amount of power Microsoft has crammed into it. 4K support is still new, making the technology required to provide it just as new and therefore expensive. The fact that the Xbox One X is actually smaller than the slimmed-down S model launched last year also makes it likely that a significant amount of the tech is custom made - something else that ramps up the price.

Phil Spencer told earlier this week that the platform holder expects to sell more S units than X over the next year, something that has "always been part of the plan". You can read the full interview here.

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Latest comments (1)

Andrew Goodchild Studying development, Train2Game3 years ago
Of course, not making any money, but not confirming a loss could also mean break even pricing.
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