Phil Spencer says next-gen Xbox is first-party — the Xbox Ally hints at what’s next

It’s been a rough few weeks for Xbox. After backlash over Game Pass price hikes and studio cutbacks, Phil Spencer has sat down with Famitsu to talk all things Xbox — from Halo and Kojima’s OD to the next generation of console hardware.

In a recent interview with Mashable, Xbox president Sarah Bond teased that the next Xbox would be “a very premium, very high-end curated experience.” Now, Phil Spencer has backed that up, confirming that Xbox isn’t leaving the console business and that a new first-party Xbox console is indeed on the way — easing concerns from fans who worried Microsoft might walk away from hardware altogether.

After having to reassure fans that Xbox isn’t pulling stock from Target or Walmart, and that it’s not exiting the hardware business entirely, Phil Spencer has now sat down with Famitsu to clear the air and discuss Xbox hardware and games.

In the interview, he confirmed that the next Xbox will be a first-party Microsoft product, saying:

When asked when it would release, Phil said it’s “undecided,” but with Xbox console generations typically lasting around seven years, that would suggest a launch window around 2027 or 2028 if the pattern continues.

Phil also offered a few clues about what to expect, pointing to the ROG Xbox Ally — the new handheld device made in partnership with ASUS — as a sign of where things are headed:

This hints that the next Xbox could be a hybrid-style device running an Xbox experience on top of Windows, something many players would welcome if it meant taking their native Xbox library to PC. It fits perfectly with Xbox’s broader “play anywhere” vision, where your games, progress, and saves follow you no matter what device you’re on.

The profit pressure behind Xbox’s future

In a recent report from Jason Schreier, it was revealed that Microsoft CFO Amy Hood has set an internal target for Xbox to reach 30% profit margins — an extremely high figure for the gaming industry. Typically, most console makers, including Nintendo and Sony, aim for much lower margins, closer to 10–20%.

To reach numbers like that, Xbox has two options: spend less or charge more. Players are already seeing the effects of this through Game Pass price hikes and the likely move toward $80 games in the near future.

This pressure to maintain profitability also helps explain the wave of studio closures, game cancellations, and the growing focus on multi-platform releases. Putting Xbox titles on PlayStation is, in many ways, easy money for Microsoft, helping offset rising costs.

There’s a lot more to this topic, and Jez Corden covers it in greater depth, so if you haven’t already, be sure to check out his full piece for a detailed breakdown.

What it all means for Xbox players

From what Sarah Bond and Phil Spencer have said, it feels like Xbox wants to redefine what “next generation” means. The focus seems to be on integration, premium design, and seamless play between devices.

It’s an ambitious goal. If OEMs can offer more affordable options while Xbox delivers a true high-end device, I’m still on board and excited to see what comes next. My concern, though, is that the financial side might get in the way. There’s a real chance the next Xbox could be sold at a profit this time around, since typical software sales might not be enough to cover losses — especially if the console supports other storefronts like Steam.

If Xbox can deliver strong specs and keep the price under $1,000, it could be an appealing option for people like me. Upgrading my GTX 1080 PC setup would easily cost more than that if I wanted to completely modernize my PC, so a hybrid Xbox that doubles as a capable gaming machine would make sense.

Still, it feels like a make-or-break moment for the brand. Some might argue that moment has already passed, but as someone who still cares about Xbox, I’ll be waiting — cautiously, but with hope — to see what it does next.

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