Xbox Hardware Revenue Has Been Dropping for Two Years Straight

Xbox has been having a hard clip selling consoles lately, and it didn't get immoderate amended implicit the 2025 vacation quarter. Microsoft has conscionable reported its Q2 2026 earnings, including the quality that hardware income were down 32% year-over-year, aft 4th upon 4th upon quarter of hardware declines.

Though we don't person existent numbers to archer however overmuch gross is being mislaid retired connected here, we tin get a consciousness of however grim this is for the hardware by looking astatine past quarters. Last quarter, Q1 of 2026, hardware declined 29% year-over-year. The 4th earlier that, Q4 of 2025, hardware was down 22%. The 4th earlier that? Down 6%. Before that? Down 29%. And earlier that, 29%, successful Q1 of 2025, which was July - September of 2024. Going backmost adjacent further done Microsoft's net reports, the anterior twelvemonth quarters saw declines of 42% (woah) successful Q4 of 2024 and 31% successful Q3. In fact, you person to spell each the mode backmost to Q2 2024, which was October done December of 2023, to find the past clip Xbox's hardware gross was amended during that play than it was the twelvemonth earlier - it was up a whopping 3% implicit the vacation quarter.

And yes, it was down 7% the 4th earlier that, 13% earlier that, down 30% earlier that, down 13% earlier that, and yet up 13% year-over-year successful Q1 of 2023, oregon July - September of 2022, astatine which constituent the numbers commencement yet showing accordant betterment year-over-year, mostly owed to proximity to the motorboat of the Series S and X.

Now, look. It's extremely normal for a six-year-old console to not beryllium selling arsenic good arsenic it was successful the archetypal fewer years aft launch. That's to beryllium expected. Early adopters thin to bargain up consoles successful ample quantities astatine launch, distributers tally retired of stock, much is produced, radical proceed to bargain until the immense bulk of enthusiasts who privation the console already person one, and past income dilatory down arsenic the console gets older. But it...usually takes a spot longer to get to that point! For comparison's sake, we person grounds that neither the PlayStation 5 nor the Nintendo Switch person had this overmuch occupation connected this standard selling systems astatine this signifier successful their respective beingness cycles, and surely not arsenic acold backmost arsenic little than 3 years aft launch. There's possibly a crushed wherefore we person hard portion income numbers of Switches and PS5s from Nintendo and PlayStation, but nary authoritative numbers whatsoever from Xbox connected the Series S and X.

None of this is astonishing to anyone who's paying attention. We've been speechmaking headlines astir the strugglines of the Xbox Series consoles for the past respective years now. In the U.S., Xbox console income deed an all-time November debased successful 2025, aft respective years successful a enactment of declining hardware income successful what is usually the busiest retail period with Black Friday.

These much caller struggles are apt tied arsenic good to the 2 spikes successful Xbox console prices conscionable this year, which saw the slightest costly Xbox emergence to $400, and the astir costly to an unimaginable $800. Its recently-released ROG Ally launched past twelvemonth astatine a whopping $1000. And due to the fact that overmuch of the precocious prices are tariff-related, the U.S. - Xbox's biggest marketplace - is chiefly impacted here. According to Circana expert Mat Piscatella speaking to america past December, the mean terms per Xbox portion successful the U.S. has risen 30% year-over-year successful 2025.

Xbox seems to beryllium well-aware that its console concern is earnestly suffering. While it's promised a new, next-gen console to travel the Series, it's besides said specified a console would beryllium a "very premium, precise high-end curated experience." And adjacent though determination person been rumors it's considering backing disconnected astir its hardware plans recently, Xbox is inactive denying them, adjacent arsenic a erstwhile Xbox founding subordinate says that "Xbox hardware is dead."

While the hardware declines were the astir noteworthy fig from Microsoft's net yesterday, it's not similar bundle was doing a full batch better. Content and services gross dropped 5% year-over-year, and wide gaming declines caused gross successful the More Personal Computing conception of Microsoft to driblet 3% year-over-year. In the capitalist presentation, CFO Amy Hood said that the gross driblet was "driven by first-party contented with interaction crossed the platform," suggesting that its first-party games (perhaps Call of Duty?) didn't bash arsenic good arsenic they expected them to.

All-in-all, different existent unsmooth 1 for Microsoft's gaming department.

Rebekah Valentine is simply a elder newsman for IGN. Got a communicative tip? Send it to [email protected].