Given recent news about the state of the Xbox Series S and X consoles, it shouldn’t come as a surprise that Xbox’s hardware sales continue to nosedive.
Microsoft shared its Q1 2026 earnings, revealing that Xbox hardware revenue was down 29 percent year over year.
This latest financial news paints a bleak picture for the hardware division, as the numbers keep getting worse rather than better. Last quarter, hardware sales were down 22 percent, down 29 percent for the first two quarters of 2025, and down 42 percent in Q4 of 2024.
Things will only get more challenging as the company also has to contend with Donald Trump and his blatant abuse of tariffs, which have forced Microsoft ot make some unpopular decisions like raising the price of the Series X console to $599.
The company has also implemented a new strategy with its “Xbox everywhere” initiative, which promotes the idea that any device that can play its games in the cloud is an Xbox.
Microsoft’s gaming division has also begun ditching the idea of exclusive games and, basically, conceded the “console wars” when it announced that Halo: Campaign Evolved, a remake of the first game in the franchise, is coming to the PlayStation 5.
Despite all the dire news about hardware sales, Microsoft is not out of the console business yet. The company just released two new handheld devices in partnership with ASUS, the ROG Xbox Ally and Xbox Ally X.
Company heads like Xbox President Sarah Bond and CEO Satya Nadella have also begun teasing the next Xbox console, sharing that it will be a premium, high-powered PC/gaming console experience that will most likely include multiple storefronts, like Steam.
We shall see what the future holds for the company.
