Phil Spencer Reiterates Hardware Is Still A 'Critical Part' Of Xbox

One of the biggest companies in the world that went "all in on gaming" ain't going to stop making hardware after 30 years. Microsoft also makes many other types of profitable hardware. They can just make the next Xbox slightly more expensive and profitable out the box, for the "fanboys/girls".

Anyone who thinks the console is going away is clearly not understanding of the business, but anyone who thinks the console is the only (or even the biggest) piece of the puzzle clearly doesn't understand business as a whole. The console will always be a piece of the pie and just because it doesn't sell as much as the competition doesn't mean Xbox can't be the market leader. Selling plastic boxes helps, but there is a broader audience out there to grab. Console/Cloud/PC, that is the strategy.

Sure Phil, your track record speaks for itself.

Hardware isn't going anywhere. MS didn't drop nearly 100 billion in the last decade in acquisitions alone to bow out. They're in a very, very strong position imo - they've got more studios than ever, a pipeline that's so packed that their last direct was for just Q1 and Q2 and was still weighty, and they now own and operate the behemoth that is ABK. It's night and day compared to Xbox a few years ago 👊

The hardware might not go away, but the people buying it in large numbers certainly will (and have already).

I think MS would stop making consoles if they could get GPU on PlayStation. Like they've given up marketing for the Xbox. Maybe they've stopped the advertising as they're preparing for a massive advertising push for the next xbox if it is coming out in 2026. I just hope it doesn't rely on cloud features.

Welcome to MS Surface Xbox era. It’s literally the same business model. All we’re missing is redistributed XboxOS.

I look at hardware as a critical part of what we do, but not trying to gatekeep the games off of other places

No doubt this will assuage the doomsday prophets on Microsoft's new strategy....oh who are we kidding, this will just make them angrier 😅.

He might want this to be the case but it just isn't going to pan out that way with the current trajectory.

The minute it becomes less profitable to make their own hardware than to just publish games for everyone else, the script will flip because that's what this is all about, printing money.

It’s nice that Phil says these things, but we know he’s not the one that calls the shots. Satya Nadella and the board of directors are ultimately who will determine the future of Xbox hardware. If it’s not performing to their satisfaction they will not hesitate to kill it - the Windows Phone/Nokia saga is evidence of that. And Phil isn’t going to be Microsoft Gaming president forever, will his replacement also share his fondness of dedicated hardware?

@Cakefish. Well there you have it, along with Satya Nadella who only last month included in a list that Longterm as a company 'we can bring long term Console innovation".

If I only owned a PS5, I would be far more concerned about the state of Sony's incapability to release First Party AAA games than anything Microsoft are doing.

It should be obvious by now that xbox will continue with hardware for a very long time.

@Cakefish don’t pretend you understand how business works, at least he said they’re still doing consoles, and it’s why they said that in the first place, to reassure doomsayers like you

@Rog-X their actions are sometimes different from their words, that’s why I can’t fully trust them. In 2021 they were talking up exclusives, but they’re now doing the exact opposite. They said Activision games on Game Pass wouldn’t result in price rises, but they indeed raised prices for Game Pass as soon as games started to get added to the catalogue. They said HiFi Rush was a huge success and then attempted to shut down the studio and sold off the IP. I want to take them at their word, but history shows they don’t always practice what they preach. So I have to take their promises with a grain of salt these days.

For Microsoft, a hardware and software behemoth that also happens to own the most popular OS, consoles are a no-brainer. There will be Xbox consoles as long as there is a console market. If anything, Xbox is the most future-proof of the three, readier for how future consoles could be. Microsoft has also proven to be the most respectful with their customers' libraries.

Regarding the competition, Play Anywhere exists since the beginning of the last generation. If Play Anywhere, PC Xbox app and Xbox games on Steam haven't destroyed Xbox, I assure you that PS won't, as PS is small compared to PC, so small that Sony is going to PC, too. I mean, of course PS5 shipped numbers are good on paper, but first-party sales and engagement aren't so good. The console wars are over. It's the publisher wars now.

i find that hard to believe . do you know how hard it is to pull away from PC with full controller compatibility with xbox controllers + game bar + all xbox games in superior format+ game pass & literal xbox live integration and FREE ONLINE ?? pc is xbox on steroids

They need to go back to the drawing table, to define what the Xbox is. It seems that phil lost his focus.

@The-Chosen-one well, playstation should too, and yet you’re more focused on xbox

@Cakefish well, maybe if you’re not stuck in the past, you’re understand sometimes it’s about business, before you say you didn’t mention anything about business, maybe you don’t act like that phil spencer have to ask you personally on how to run xbox, before you say you didn’t say that, your statement made sound that way

I mean what more do you want from him, for him to basically be on his hands and knees saying they will do consoles?

It's pointless, Phil.

The negative nancies have decided that the Series S and X are the last gaming hardware Microsoft will ever produce because of the "going multiplat" strategy. They know the business inside out, you see, so they know better than the people who actually work in the industry.

@Isolte I think since Activision were bought, internally the game has changed at Xbox.

Suddenly they were no longer a minor division of the company but one of the players that now needs to pull their weight profit wise and to that end there is now more involvement from bigger fish in the company.

As a result I believe there will be no quarter given when it comes to allowing flights of fancy, everything will need to justify its existence and if it doesn't make money it will be scrapped - dedicated hardware included.

@Shy_Hallaman Silly comments floating around the web by people who have ZERO idea about business.. Obviously there will be a next powerful Xbox, and the handheld is all but confirmed. Remember, console is driving Game Pass more than any other platform for Xbox and while it may not be the only part of the puzzle the console is a prominent piece. You don't need to sell more plastic boxes than your competition to be #1, your brand just has to make the most revenue. Business 191, man. Don't let the negativity get you down.

@themightyant I don’t think it’s much of a concern at all with Steam Deck being as popular as it is and is now a goal for developers to get Verified.

Heck, even Final Fantasy VII Rebirth is verified for the system! That’s a big feat for a game that was only on PS5.

So in 2025 he's promising more hardware.

In 2024 he promised "just 4 games going to PlayStation".

In 2021 he promised Zenimax was bought to provide exclusive games where Game Pass exists.

So, which do we believe?

Seems like some things need clearing up:

• I’ve never doubted that a next generation Xbox is currently in development nor claimed that I think it will be cancelled
• I’ve never denied that the Xbox division is more profitable than ever before or denied that the transition into third party publishing will decrease profits in any way
• I’ve never doubted Satya or Phil’s ability to run a profitable business or maximise value for the company’s shareholders

@Medic_alert how do you know this plan won’t work more than the literal head of Xbox who knows all the numbers and knows if it’s profitable, if it’s not profitable it won’t be here simple as that

@themightyant everything may or may not be an Xbox but the only things running xbox games natively are Xbox Consoles and PC. All the other instances are cloud streamed, which means they're running on an Xbox console in a data centre somewhere.

It's not like a ten year old phone is going to set the standard.

I think it's great that Phil is saying that more hardware is coming. I'm almost certain to buy the next console.

But he totally swerved by the question about why people would choose to buy one when their consoles will be the only ones that don't have exclusive games. Gamepass is great, I've been subbed for years, but guess what, Playstation has PS+, xbox's games and some exclusives too.

So if you're not like me and don't have a history of owning every console Xbox has put out and a massive digital library, why are you buying one?

Xbox needs a unique selling point. At the moment they don't have one aside from first party games on Gamepass and they'll probably agree to put them on PS+ if Sony want to pay up. So, what is the reason to choose Xbox for the average player?

@Prestige-worldwide what do you mean by work?

I'm sure whatever happens MS will make a tonne of cash - they always do.

But the console model requires a piece of hardware to be designed manufactured and built at extraordinary cost while taking a loss on doing so with the aim of getting that platform into as many homes as possible.

They make their money back selling games and accessories but crucially the big money isn't in your own games it is in the 30% cut you get of every cent spent in your eco-system.

So the maths here is simple, when you don't reach enough console sales you can't recover cost of console development and you start to lose money.

If they don't sell enough machines third parties won't develop for it and that means no revenue from those game sales and because those games aren't there the console sales fall - the whole thing spirals.

Like I said they won't continue making them if they don't turn a profit.

Also, Phil has a track record of making such statements and then the opposite happens.

@Cakefish Everyone always references either Sega or Windows phone whenever they make an unfounded claim that Xbox may go away. Problem is that the Xbox brand is so large that this year it will surpass PlayStation in revenue, and when Sega left the hardware business they were over a billion dollars in debt to where the dying president of the company granted Sega a half a billion dollar gift to try to keep them afloat. Windows phone wasn't profitable, wasn't generating revenue, and had no way to reap money from its users. The Xbox is still selling okay (35+M), it's Game Pass service has 70% usage among console owners, and the brand is generating record revenue. People who don't understand business need to chill and not make silly claims about the future of Xbox.

If GP lineup in 2025 is a new standard, I am buying next xbox. Not even a question.

Dont see a point in guessing and stressing about what happens to the box in 10+ years.
Next gen in 2026-2027 pretty much confirmed + another 6-7 years we dont have to worry about anything.
Worst case whaetevr console is the last - no one is taking away your purchases, achievements, etc. Will move to different platform and forget it.

See, we dont know the cut-off point with xbox console sales. Maybe even 20M enough for them - who knows.

Honestly, I could care less about the sales until most of 3rd party games are coming to xbox and until GP lineup is strong. And yeah we had issue like wukong, but we have an opposite example with Square Enix - seems like 30M of series is enough for them to port games and stop exclusivity with Sony.

@Slinko the thing is they are not trying to sell you a console anymore.
I dont agree with this but it is what it is. We have been discussing this for almost a year at this point.

They are making xbox console for people who want it. Fans will buy it, GP enthusiasts will buy it too. Seemingly thats enough for them and they are happy to trade console sales for profits in another platforms.

I only care about them doing hardware, games and GP.

I don't see a reason to get a new Xbox if the games will be on switch and PlayStation

@TheEstablishment I’ve never claimed that I think Xbox will go away? Xbox as a publishing business will be fine, it’s very profitable and growing. The current Xbox consoles are okay, 30 million sales is decent enough, so third parties are mostly supportive (though some delay their releases). The next generation console is happening, I’m not saying it’ll be cancelled.

What I am worried about though is how much that next generation console will sell (it’s going a steep uphill battle to sell >30 million as XSX|S have done), what the third party support will look like if it does underperform XSX|S sales wise, and ultimately whether the next generation after that will be greenlit by Microsoft.

It's crazy how people still trust Philnocchio lol.

Fool me once comes to mind every time I hear that man speak but still somehow there's people that take his word as gospel. Oh well, I guess they'll find out the hard way yet again.

Whose hardware?

Jokes aside I can't see myself investing in an Xbox console again the way things are going unfortunately. Frankly, I don't know why MS would invest in an xbox console. It's one thing to have a bad generation or even two, but how do they gain any foothold again given the current state of the brand? Honestly I just don't see the point in an Xbox console existing if you can just get the games on another console. Why double dip and have two consoles when you can get everything on one?

And you can double my lack of enthusiasm if this guy is still the one in charge when and if the time comes for new hardware...

They might keep making consoles but not many people are going to buy them. I won't be, can put that money towards games on other platforms now instead.

@MrMagic ‘Philnocchio’

😂 I love that, it’s a good one.

Phil has never shown the Series X anywhere near the kind of gushing praise he has often bestowed upon the PS5 and Switch in various articles and tweets since 2021. The Series S has been fortunate to occasionally been given a good word by him.

What he has championed for Xbox consistency is Gamepass, the drive to have Gamepass on other systems and now having all Xbox games eventually ported to rival systems.

I have severe doubts he really believes in Xbox hardware going forward.