Microsoft is losing approximately $150 (£112) on each Xbox Series X or Series S console sold due to rising memory component costs, and the planned August price increase will not be enough to make the hardware profitable, according to a report from Windows Central.
Memory crisis deepens losses
Video game consoles are typically sold at a loss at launch, with manufacturers recouping costs through sales of peripherals, games, and online services. However, the current generation has been hit by a memory shortage that has driven up component prices, forcing companies to raise console prices. Microsoft appears to be the most affected. The company was already selling the Xbox Series X/S at a loss in 2022, but the situation has worsened due to the RAM crisis.
Windows Central reports that Microsoft is losing around $150 per console sold recently. The August price hike, which will increase the Xbox Series X 1TB model by $150, will still not push the console into profitability. For comparison, Sony's PlayStation 5 has been profitable since 2021, though it is unclear if the memory crisis has changed that situation.
Nintendo Switch 2 also selling at a loss
Nintendo reportedly sold the Switch 2 at a loss when it launched in June 2025, despite traditionally being the only console manufacturer to sell hardware at a profit from launch. The company announced a price increase for September, but according to Nintendo president Shuntaro Furukawa, the move was because they felt 'the profitability of our hardware would suffer significantly' if they kept the current price. Hideki Yasuda, an analyst at Toyo Research Advice, told Bloomberg that the price increase would only make the console less of a burden, rather than truly profitable.
Xbox sales lag behind competitors
The Xbox Series X/S is nearly six years old and lags far behind the PlayStation 5 in sales. As of March 2026, the PlayStation 5 has sold 93 million units lifetime, while the Xbox Series X/S is estimated at 35 million units. Nintendo's Switch 2 has sold 19.86 million units since its launch in June 2025. Microsoft stopped reporting console sales early in the Xbox One generation, so the Xbox figure is an estimate.
Microsoft's internal challenges
Xbox CEO Asha Sharma wrote in a memo to staff that the component crisis has impacted Microsoft more than its rivals. 'While the entire industry is facing a components crisis, we believe we have been impacted more greatly than many of our peers due to the choices we made over the last half decade,' Sharma stated. 'We are currently unable to make as many consoles as players want to buy, and we need a new business model and partnerships for hardware as we remain committed to [Project] Helix.'
Due to losses over the past year, Xbox is set to lay off approximately 3,200 people before the end of the financial year and has cut several studios, including Double Fine and Ninja Theory. The next Xbox console, Project Helix, is expected to launch in 2027 or 2028, but based on current trends, it is unlikely to be affordable.
