Microsoft announced a third relevant price increase for the current generation of Xbox consoles, in yet another clear example of the component shortage crisis, which has been increasing the costs of technology products for consumers.
Starting August 1, Xbox consoles will be $100 more expensive for versions with 512 gigabytes of storage and $150 more expensive for 1 terabyte models. Microsoft will also discontinue the 2 terabyte version, which was the largest capacity.
“We hoped that a new price increase would not be necessary and have spent the last few months working with suppliers on alternatives,” the company wrote on the official Xbox blog this Thursday (25). “Unfortunately, storage and memory prices for consoles have risen more than 2.5x and we expect another doubling by fall 2027.” Microsoft added that unlike other consumer products, video game consoles typically sell for less than the cost of production.
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Earlier, also this Thursday, — but not from the iPhone line — attributing the change to the unprecedented demand for memory, SSDs and other components, which have been absorbed by artificial intelligence companies.
The gaming hardware segment, in particular, has been heavily affected by price increases in the last two years. Microsoft raised the price of Xbox Series X and Series S consoles for the first time in May 2025, and readjusted them again in October of the same year. With the new price list, the standard Xbox Series
On Monday, Valve announced that its highly anticipated Steam Machine console will cost more than $1,000, acknowledging that the product’s originally anticipated price was “no longer viable.”
Microsoft has lagged behind rivals like Sony and Nintendo in gaming hardware sales and revenue over the past decade. The CEO of the company’s games division, Asha Sharma, who took up the post in February, is preparing a restructuring and significant job cuts in the unit to try to put the business back on a better path.
In an email sent to Xbox employees earlier this month, Sharma said he expects that by holiday 2027, the company will be paying five times more for storage and memory components than it was in 2024.
The shortage of components continues with no signs of relief and casts uncertainty over Microsoft’s next console, currently called Project Helix, and when it will be able to reach consumers.
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“We’re working hard to rethink everything possible in Helix, a console we remain committed to launching,” said Matthew Ball, Xbox chief strategy officer, in an interview this month at The Game Business Live conference.
Among other measures, Sharma tried to regain player enthusiasm by prioritizing exclusive Xbox games again. But consoles capable of running these titles are now more expensive than ever.
In the post published on its blog, Microsoft stated that it has been adopting measures to reduce the impact of the readjustment on the consumer. These include buy now, pay later programs at the company’s own stores and interest-free financing plans on Amazon.com. The company is also negotiating with retailers for new programs to sell used consoles at lower prices.
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