So today, rumors began to swirl across the internet that Xbox is planning to exit hardware, and move entirely to Xbox Cloud Gaming as the primary way to access content. I can confirm via very trusted sources that this isn't true. At least for now. But that, "at least for now" qualifier is a real problem. How can we know what will be true next quarter?
Let's put aside for a minute the fact that Xbox Game Pass remains a primary driver of revenue, and is most prolific on Xbox console hardware — and that's where the bulk of the users are right now. Let's put aside the fact that Xbox Cloud Gaming is restricted by location and is expensive to run. Combine that with the fact that with the same silicon, you could give people their own "cloud" natively in their house — and get them to use their own electricity to power it. You know, like a console. It doesn't make a lot of sense on paper. But regardless, that's where we're at.
All of these rumors emerged in the wake of Microsoft's barely-explicable 50% price rise in Xbox Game Pass Ultimate, and the weird tone-deaf way in which they tried to present it as a "good thing" throwing in Fortnite Crew and stuff people didn't really ask for.
The fact these latest hardware exit rumors continue to seem plausible is a real problem. It showcases, to me, a very deep disconnect between Microsoft and how its audience and the community at large views gaming in general.
Microsoft's multi-year partnership with AMD for next-gen Xbox hardware is still the present plan
I could easily be just as random a source claiming that Xbox hardware is still on the table, but it was our sources that confirmed the existence of the Xbox Series X|S, their specs, their price, in addition to reports on the cancelled cloud "Keystone" console, the shelved first-party Xbox handheld, and more recently, the Xbox Ally. Codenamed Kennan and comprised of Omni (Xbox Ally) and Horseman (Xbox Ally X), the Xbox Ally range is part of Microsoft's multi-year partnership with AMD, which will include tailor-made devices from first party.
I've asked multiple trusted sources, many of whom spoke to me on the above devices previously which turned out to be true, about what Xbox's present hardware posture is. For now, it remains unchanged.
Microsoft publicly confirmed that it's still committed to first-party Xbox hardware over the summer, with comments from both President Sarah Bond and AMD CEO Lisa Su on silicon that would power next-gen Xbox devices — both from third and first-party.
The original comments came from a gaming forum, and suggested that Xbox's focus would be on its core mega franchises like World of Warcraft, Call of Duty, Forza Horizon, and so on, and that hardware plans were "up in the air," not actually cancelled. Those comments morphed into "Xbox hardware is cancelled" from various commentators, and have now taken on a life of their own on social media as people speculate on the future of the Xbox platform. From what I've been told, the hardware plans are not even "up in the air," and remain firmly Xbox's path forward. Xbox Series X|S hardware production has not ceased, and new stock will go out to retailers at its usual cadence.
But even if Microsoft did come out to squash the rumors themselves, it's hard to have any faith. Microsoft has been incredibly fickle over the past few years, crushed under AI hype, demands from CFO Amy Hood, and a complete dereliction of fan feedback.
The planned restructuring of Xbox Game Pass was months in the making and, beyond their apparent macroeconomic "need" to make even more money, it's based on user behavior and the desire to boost the content fund for the cohort most likely to unsubscribe without new content. Codenames appearing for the new tiers over the summer, and is not the result of a quarterly knee-jerk reaction. But it doesn't matter.
Combined with huge price hikes, retailers like Costco and others removing Xbox hardware, and Microsoft's massive layoffs over the summer — it's not unsurprising people are speculating on Xbox's demise. Microsoft is absolutely awful at managing faith in its consumer products, and I've written previously about how the telemetry driving its decisions and its diffuse focus is leading to a collapse in morale in the brand.
Gaming is not a necessity, or a utility — it's driven by sentiment and "fun" feeling. people need to also feel good about where they play, and Microsoft is making it incredibly hard to feel good about Xbox right now. It's clearly reaching a crisis point.
Xbox the pariah
I've been covering Xbox for over ten years at this point, and I started when Microsoft's bombed Xbox One reveal led to a groundswell of hate for the brand and its future. It was fostered by a sense of betrayal in what Xbox had been and represented, and led to a huge climb down that effectively dismantled the Xbox One platform — and put Xbox firmly in "third-place" forever. Lately, it feels like we're back in 2013 again.
The industry looks very different in 2025, as maturing audiences and a lack of meaningful new player growth has companies breaking the rules to find new revenue streams. We've seen Xbox games flood onto PlayStation, we've even seen PlayStation bring games to Xbox. Microsoft is licensing out the Xbox brand to OEMs with the Xbox Ally (and I'm told more OEM hardware should appear in 2026, too).
The inconsistency is exhausting for fans, and in a sentiment-driven business, potentially untenable.
The one constant that Xbox fans could point to among all of this was the clear value of Xbox Game Pass. "Xbox Game Pass is the best value in gaming," or so the meme goes. Despite some price rises over the past couple of years, it was hard to overlook what a stellar year it had thus far, with games like Expedition 33, Blue Prince, DOOM, The Elder Scrolls: Oblivion remake, and others. But with an unprecedented 50% price increase on the tier that actually gets day one games, the negative reaction has been incredibly strong.
It all just feels like another betrayal, particularly given President Sarah Bond's comments that Xbox Game Pass is profitable, and also hitting $5 billion in revenues. The way Xbox presented the "changes" as a "good thing" came across as tone deaf, especially given how other companies are pushing up prices while also simultaneously reporting record profits.
So, it's hardly surprising that these rumors gained so much traction, because even if they're not true today, they could definitely be true tomorrow. It's hard to take anything what today's Xbox says or does on faith, because they're apparently willing to throw anything and everything on the fire if it means a quarterly boost.
The inconsistency is exhausting for fans, most likely concerning for developers — and in a sentiment-driven business, potentially untenable.
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