One of the biggest announcements at E3 2017 was the reveal of Microsoft’s first 4K-enabled console, the Xbox One X, which is scheduled to launch later this year on November 7. With Microsoft having announced the upcoming release of its new system, it would be fair to assume that the company is poised to make a great deal of money from hardware sales of what is said to be the world’s most powerful gaming console to date. According to Xbox head Phil Spencer, though, this won’t be the case… Not initially, anyway. In an interview with Business Insider, Spencer claims that Microsoft will not be making any money off of hardware sales for the new console. This is rather surprising, given the console’s staggering $500 price point. When asked if Microsoft would instead be taking a loss on the console sales, Spencer did not provide a tangible answer. With Microsoft not profiting on Xbox One X console sales, it appears that the company is going for the long game, which Spencer corroborates in the following statement:

I don’t want to get into all the numbers, but in aggregate you should think about the hardware part of the console business is not the money-making part of the business.  The money-making part is in selling games.”

To be fair, Spencer has a point. Peripherals, games, and services like Xbox Live Gold can really add up, a statement that can be assumed to be in Nintendo’s credo by now, given the gobs of money the company has been making off of peripherals for the Nintendo Switch. Given the distinct lack of accessories that came with Nintendo’s latest console, it’s a wonder that the Switch was even shipped inside its own box.  

Another factor to take into account is the current cost of 4K technology. 4K gaming setups are currently very expensive and not widely used, much in the same way HD tech was before the normalization of the technology. As the cost of making the Xbox One X and other 4K devices like the PlayStation 4 Pro goes down, Microsoft’s profit margins will rise. Microsoft not profiting on their newest console now may very well translate into huge profit margins for the company later, assuming the company continues to provide incentive to those looking to purchase the Xbox One X. The company is off to a good start, as there are currently 35 existing games that will be receiving a free upgrade to take advantage of the 4K console, as well as more recently announced games for the console like PlayerUnknown’s Battlegrounds.  

So, what are your thoughts on Microsoft not profiting (initially) from Xbox One X console sales? Do you think their pricing decision will end up working out for the company in the long run? Plan on picking up the console when it arrives this November? Let us know in the comments section below, and as always, stay tuned to DFTG for all the latest gaming and entertainment news! Don’t forget to follow Don’t Feed the Gamers on Twitter for our 24/7 news feed!