On November 7, Microsoft is releasing its mid-generation console refresh, the Xbox One X. This 4K-capable machine may be more powerful than Sony’s rival PlayStation 4 Pro, but at $499, it’s also around $100 more expensive. Microsoft, however, claims it won’t be making money on the sale of the upcoming console.
Speaking during a recent interview with Business Insider, head of Xbox Phil Spencer was asked if Microsoft makes any money selling the Xbox One X at $500. While he didn’t specifically say the company was making a loss, Spencer said: "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 added that Microsoft would be relying on games to make up the Xbox One X profits. “The money-making part is in selling games," he said.
It’s worth noting that as the costs of manufacturing the new console inevitably fall, Microsoft will start making more money on each unit sold. The price of the Xbox One X itself will also eventually decrease, and more units are expected to sell as the popularity of 4K/HDR TVs increases.
While many people were disappointed with the Xbox One X’s $500 tag, it’s something most analysts were expecting. Some commentators thought it might be higher, and Microsoft even said it was “proud of the pricing.”
“The fact is we designed this to be a premium product that has the most power, the most performance that has ever been seen, no compromises; true 4K gaming,” said Aaron Greenberg, head of Xbox games marketing.
$500 is a lot of money, and online reaction to the machine has been pretty mixed. We’ll have to wait a few more months to find out just how popular the “most powerful console on earth” becomes.