It is not uncommon that gaming companies lose money on new hardware. Many companies have lost money on their new consoles, one exception is the Nintendo Switch. Prior to their launch, they noted that they will be making a profit on those consoles. It seems that at $499, Microsoft will not be making money on their 4K console.
In an interview with Business Insider, Xbox head Phil Spencer confirmed that they will be losing money on their new console. “I don’t want to get into all the numbers, but in aggregate you should think about the hardware part of the console business is not the money-making part of the business. The money-making part is in selling games.”
Depending on which camp you belong to, whether it be Sony or Microsoft, it will be spun many ways. If you are part of the Microsoft camp, a note that many consoles lose money on hardware and make money on games. Which is true. If you are in the Sony camp, they will tell you that it has a lot of fear because of their higher price point and could be a failure. This is, also, true.
Sony released the PlayStation 4 Pro, which allowed for 4K resolution and then you would have to pay extra if you wanted to take advantage of the VR portion of the console. It is priced at $399.99 for the PS Pro and you could spend an additional $399.99 for the PlayStation VR, which does not include the console itself.
Microsoft’s introduction of their new console is not much of a risk when it is placed next to the PS Pro and VR. In the end, without the VR, you can still get the fastest console ever made. Keep in mind that the 4K resolution would only work if you have a 4K television. In the end, Microsoft is not any more riskier than Sony’s PlayStation VR and the mixed reports you receive from Sony. Mostly their claim of selling out but every store you go to seem to always have quantities in stock.
The major takeaway from Spencer’s comment is that losing money on a new console is nothing new. After six months to a year, they will find a way to make it cheaper and release a slim version of the console for the same price. There they will make their money. If gamers are smart, they will wait until they can get an awesome deal on a trade-in for the Xbox One to the Xbox One X. That is where your money should be at.