Xbox consoles are still selling less than they did a year ago. In the quarter that ended on 30 September, Microsoft’s Xbox hardware revenue fell 14% year on year, and revenue from games and subscriptions slipped 2%.
Asha Sharma, who leads Xbox, gave the explanation that the company wants on the record: she says there is “more demand than consoles available” and that sales “remain constrained by supply”. Microsoft’s own numbers show a smaller business than a year ago, whichever way it is read.
The numbers behind the quarter
Microsoft’s earnings release for the first quarter of its 2027 fiscal year, published on 28 October, puts Xbox content and services at $5,379 million, against $5,508 million a year earlier. That is a 2% drop, or 1% once currency swings are removed.
| Xbox line | Change on a year ago |
|---|---|
| Content and services | Down 2% ($5,379 million) |
| Hardware | Down 14% |
The release blames the services decline on lower third-party content and Game Pass revenue, partly offset by growth in first-party content. The hardware figure comes from the segment results as reported by games outlets, which say the fall reflects fewer consoles sold.
The supply argument
The supply line comes from Eurogamer’s report on the results, which carries Sharma’s remarks. We could not check the wording against a transcript, so treat the quotes as that outlet’s account.
The argument fits a year in which hardware has been squeezed. Xbox raised console prices in August for the second time in under 12 months, with the 1TB Series X going up by $150 and the 2TB model discontinued, according to Shacknews. Higher prices and tight supply both pull unit sales down, and the results do not separate the two.
Memory is part of the pressure. Samsung’s latest earnings commentary, covered this week, says the RAM shortage that has lifted console prices across the industry will get worse in 2027, so supply is unlikely to ease soon.
No new hardware in sight
Nothing in the results gives a price or date for new Xbox hardware. Shoppers looking at a console this holiday season are therefore dealing with the prices already on the shelf.
The holiday quarter will show up in Microsoft’s next quarterly report.
