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Moscow, Russia – 2020, November 02: new video game consoles: White Xbox Series S and Black Xbox Series X<\/p>\n
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In this, the new era of Xbox transparency, the brand\u2019s new CEO, Asha Sharma, penned an expansive blog post<\/a> about the challenges facing the company, many of which translate to the larger industry as a whole. While it paints a particularly dire view of Xbox\u2019s business in particular, Sharma\u2019s explanation of what exactly is going on in the hardware side of the industry is the clearest explanation for why consoles like the PS5 and Xbox Series X\/S have done double price hikes over the past year or so. Now, even Nintendo is starting to as well.<\/p>\n The problem is just how much prices have increased on hardware components, and we\u2019re not talking about things like 10, 20 or even 50% increases. Rather, we\u2019re talking multiples due to AI systems gobbling up all the tech and raising these prices. Here\u2019s Sharma:<\/p>\n \u201cWe are in a hardware component crisis. When I joined as CEO in February, the price we paid for console storage components was over 2x as high as we paid last fall. These costs have since doubled again. And as we plan for the 2027 holiday season, we expect another significant increase, taking us over 5x the prices we paid only two years earlier. Memory costs have followed a broadly similar trajectory.\u201d<\/p>\n She goes on to say that Xbox is even more heavily impacted than other brands due to \u201cthe choices we made over the last half-decade,\u201d without elaborating. But clearly the issue is widespread, as not only do we have an $800 2TB Xbox Series X, but also a $900 PS5 Pro.<\/p>\n For Xbox in particular, however, the obvious question is where its hardware business goes from here now that costs for components have increased 500% in two years, when the hardware space was hardly some sort of high-margin business to begin with. That would seem to clash with Sharma\u2019s recent \u201crefocus on hardware\u201d plan, as how exactly is that going to work?<\/p>\n Play Puzzles & Games on Forbes<\/p>\n Asha Sharma, chief executive officer of Xbox,, during the Bloomberg Tech conference in San Francisco, California, US, on Thursday, June 4, 2026. The event brings together the leading CEOs, investors and innovators who are harnessing technology to change the world around us. Photographer: David Paul Morris\/Bloomberg<\/p>\n \u00a9 2026 Bloomberg Finance LP<\/p>\n Specifically, the Xbox Series generation appears to be close to flatlining. While Microsoft says that demand is outstripping supply, that\u2019s likely because production has plummeted due to these costs. <\/p>\n Additionally, Xbox has already announced its next hardware unit, the Xbox Helix, which is said to be some sort of PC and console hybrid, possibly able to use multiple storefronts. The idea there is some sort of \u201cvalue\u201d gaming PC, but while that may have been the original plan, how on earth are we now not talking about a unit that has to be over $1000, if not well over, and who, outside of a niche, is going to play for something like that?<\/p>\n This is only one of Sharma\u2019s five points addressing the enormous challenges ahead for Xbox, and it\u2019s unclear how many ways out there even are, given the context of the state of that ecosystem. But these component costs are rapidly making gaming unaffordable for consumers, and these price increases still may not even be enough for these manufacturers to avoid losses.<\/p>\n Follow me on Twitter<\/a>, YouTube<\/a>,<\/a> and Instagram<\/a>.<\/p>\n