Microsoft have revealed they’re struggling to make their new Xbox console (known as Project Helix) affordable due to a hardware “crisis”.
Last year, former Xbox boss Sarah Bond said the next-gen Xbox console was going to be a “very premium, very high-end curated experience” which fuelled speculation that Project Helix could cost at least $1000.
However earlier this year, new boss Asha Sharma told developers that she was looking to make the new console “affordable” and partly rolled back a massive price hike for subscription service Xbox Game Pass. Last night, she shared an open letter about the future of Xbox. “It is important to have both optimism and realism as we work to reset the business,” she wrote before talking about making the business more streamlined and focused, which is usually industry speak for laying off staff.
She revealed that Microsoft has spent “over $20 billion on ongoing investments in our content, platform, and hardware subsidy” over the past five years while their annual revenue has “declined nearly half a billion” during that same time. “Going forward, this cannot continue.”
Xbox’s new CEO Asha Sharma has issued an internal memo.
> She also admits that Microsoft has spent more than $20 billion on content, platform, and hardware subsidies over the past five years.
> Despite the massive investment, the gaming division’s annual revenue has still… pic.twitter.com/FXqBRbD8Iu
— Pirat_Nation 🔴 (@Pirat_Nation) June 10, 2026
Sharma also confirmed that Microsoft is in the middle of a “hardware component crisis.”
Earlier this year it was reported that the PlayStation 6 and the new Xbox consoles could be delayed to 2029 due to “RAMmageddon”, which is what some are calling the scarcity and subsequent price increase of memory chips that are being used in AI data centres.
“When I joined as CEO in February, the price we paid for console storage components was over 2x as high as we paid last fall. These costs have since doubled again. And as we plan for the 2027 holiday season, we expect another significant increase, taking us over 5x the prices we paid only two years earlier. Memory costs have followed a broadly similar trajectory,” said Sharma. “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. 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 Helix.”
Speaking to Fortune this week, Sharma said the next generation of Xbox might not be “the most premium, high-performance console” because “we’ve reached a point where it will be hard to imagine that mass audiences can afford thousands of dollars to spend on a console.”
In other news, the first new Spyro The Dragon game in more than 18 years was announced earlier this week – and more could be on the way.