Over the years, Microsoft has pushed out different models and generations of Xbox consoles. The consoles are sold at a few hundred dollars each, but what’s interesting is that Microsoft has actually never profited from selling them. This interesting nugget of information was revealed during the Apple VS Epic trial.
During the trial, Microsoft’s head of business development at Xbox, Lori Wright, was called to testify by Epic’s lawyer Wes Earnhardt. When asked if Xbox hardware sales were profitable, Wright answered no. In fact, according to Wright, Microsoft actually sells its Xbox consoles at a loss.
It might seem a bit silly to sell at a loss, but according to Wright, that was the strategy. The hardware was meant to rope in gamers who would then spend money on the Xbox ecosystem like games and subscription services like Xbox Live Gold and Game Pass Ultimate, all of which presumably would eventually help them cover the loss they make from selling the consoles.
It’s an interesting approach and we have to wonder if Microsoft is the only one facing this problem. We can only assume that Sony and Nintendo also make money from selling services and games, but whether or not they take similar losses in the hardware department is unclear.