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Xbox sales drag Microsoft's hardware down
29 Jan
Summary
- Xbox hardware revenue has declined consistently since 2023.
- Microsoft's AI services are driving significant revenue growth.
- New Xbox games will be available on PlayStation 5.
Microsoft's personal computing division experienced a 3% revenue drop compared to the same period last year, with Xbox hardware sales identified as the main cause. This marks a continuation of a downward trend for Xbox hardware, which has not seen consistent positive numbers since 2023. The rising cost of consoles, such as the Xbox Series X digital edition at $600, has impacted holiday sales.
In stark contrast, Microsoft's focus on artificial intelligence is yielding substantial financial gains. The company's intelligent cloud services, including Azure, reported a 39% revenue increase, contributing significantly to an overall 17% rise in total revenue and a 23% jump in net income. This AI-driven growth overshadows the struggles in Xbox content and services, which saw a 5% decrease in revenue, partly due to price hikes in Game Pass Ultimate.
Looking ahead, Xbox is set to release several promising titles, including Forza Horizon 6 and Fable, which will be available on PlayStation 5. Halo: Campaign Evolved and Gears of War: E-Day are also slated for a 2026 release across platforms. However, the high price point of new Xbox consoles remains a barrier, and the brand's future may involve further consolidations and a reduced emphasis on dedicated hardware sales as Microsoft prioritizes its AI ambitions.
