Xbox CEO cites component cost surge as reason for $800 console price

Microsoft's new Xbox chief Asha Sharma said the company’s latest 2TB Xbox Series X will retail for $800 because of a sharp rise in component costs. In a blog post, Sharma described a "hardware component crisis," noting that the price paid for console storage was more than double what the company paid in the previous fall and has since doubled again. She added that costs are expected to rise further, potentially reaching five times the levels of two years ago, with memory prices following a similar pattern.

Sharma said Xbox is particularly affected by decisions made over the past five years, though she did not provide details. The price hikes are not limited to Xbox; Sony’s upcoming PS5 Pro is listed at $900, and Nintendo is also seeing higher pricing.

The CEO acknowledged that the increased costs pose a challenge for a hardware business that traditionally operates on thin margins. While Microsoft claims demand exceeds supply, production has reportedly fallen as manufacturers contend with higher component prices.

Xbox has announced a next-generation device, the Xbox Helix, described as a hybrid PC-console system aimed at offering a lower-cost gaming PC alternative. However, analysts question whether the unit can be priced competitively given the current component price environment.

Sharma’s post outlined five major challenges facing Xbox, with component cost inflation identified as a primary factor that could make gaming less affordable for consumers.