Xbox: “We are in a hardware component crisis”
In an internal memo published on June 10, Xbox CEO Asha Sharma outlined five realities facing the gaming company — including a stark assessment of the hardware component situation.
Microsoft's Xbox division has outlined a 100-day business reset initiative as the company seeks to address declining profitability, rising hardware costs, and slowing revenue growth.
In a memo to employees published on Xbox Wire on June 10, Xbox CEO Asha Sharma and Chief Content Officer Matt Booty said the company has made early progress during their first 100 days in leadership, citing increased platform updates, growth in partner activity, and a return to subscriber growth for Game Pass following an extended period of decline.
However, the executives warned that Xbox faces significant structural challenges.
"We are in a hardware component crisis," Sharma wrote. "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."
The consequence is direct: Xbox is currently unable to manufacture as many consoles as players want to buy. Sharma acknowledged that while the entire industry is facing a components crisis, Xbox has been impacted more than many peers due to procurement and design choices made over the past five years.
The company says it needs a new business model and new partnerships for hardware, while remaining committed to its next-generation console, codenamed Helix.
“For some of you, these realities will be surprising and even frustrating to discover. We won’t succeed by hiding hard truths, nor will we succeed by doing the same thing and expecting different results.”