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5 reasons why Xbox hardware isn't going away

PowerA Stand
PowerA Stand (Image credit: Windows Central)

With Microsoft's push to cloud services, is their end game to bring about the end of Xbox console hardware altogether? Hardly.

Here are a few pretty simple reasons why Microsoft isn't bailing on Xbox home console hardware any time soon, and why you shouldn't "worry" about Project xCloud streaming services becoming the norm.

1. Look at Surface

Surface Book 2

Surface Book 2 (Image credit: Windows Central)

For people who think Microsoft wants to get out of the hardware game, they should first and foremost look at the Surface range. The Windows laptop ecosystem isn't the powerhouse it once was, facing hard competition from Chromebooks and mobile devices in general, but there are still many big players in the space making tons of cash.

Between Surface and Xbox, Microsoft now boasts some of the most advanced industrial design capabilities on earth.

Dell, Lenovo, and HP are the most well-known PC brands out there, and even with them serving consumers and enterprise well with a huge array of PC options, Microsoft still pushes ahead with its Surface line.

Why does it do this? It's a simple case of because they can, and because there are advantages that come with marrying hardware and software under a single roof. Between Surface and Xbox, Microsoft now boasts some of the most advanced industrial design capabilities on Earth. Surface as a growing, billion-dollar business ultimately represents the best that Windows has to offer, showcasing all of Windows' features, whether it's touch, inking, and adaptive 2-in-1 hardware, Surface drives a "halo effect" over the Windows ecosystem, representing cool factor in a way that Dell, HP, and others, for the most part, don't. Xbox hardware will do the same for Xbox games, even if (big if) most people opt for Project xCloud streaming.

2. Retail still matters (for now)

While trends are moving towards digital, retail is still a big driver of both sales and general information, especially for parents picking up games for youngsters. Some people simply enjoy owning the physical disc as well, and there are things like collector's editions that many gamers take joy in possessing (myself included).

If Microsoft was to remove itself entirely from the retail scene, removing both hardware and physical games, it would dent people's exposure of the platform, and harm perception of Xbox as a gaming platform. Of course, there are some examples to the contrary. Steam was virtually able to single-handedly destroy the physical PC games market, shifting PC gamers over to more convenient digital options. PC hardware has generally followed suit too, with most modern laptops and PCs ditching optical disc drivers altogether, driven by a shift to online distribution not just for games, but for software, music, and movies. Microsoft doesn't have the luxury of Steam-level total platform dominance in gaming and to some degree still relies on physical retail distribution to help push its platform.

3. Project xCloud is powered by Xbox hardware

Another pretty obvious reason why Microsoft isn't about to ditch Xbox home console hardware is the simple fact that Project xCloud itself is powered by Xbox home console hardware, converted into server racks.

Today, xCloud is powered by Xbox One S-level hardware capped at around 1080p, but as internet speeds increase, so too will the need to upgrade the server rack hardware, eventually to the Xbox One X level, then to Xbox Anaconda level, and so on. If Microsoft is already making server racks that support Xbox game delivery systems, why not simply package it and sell it as a home console as well? There's no real downside to doing both.

4. Licensing conundrum with xCloud

Project xCloud

Project xCloud (Image credit: Microsoft)

Although we have no real insight into the licensing deals developers sign with Xbox, owing to very, very strict non-disclosure agreements, it seems completely unlikely that Project xCloud will suddenly simply enable access to all of your digital Xbox games over night.

The benefits for developers of Project xCloud (if it works as intended, of course) are pretty obvious. Access to billions of additional mobile phone screens, lower-end PCs, smart TVs, and who knows, maybe even competing consoles like the Nintendo Switch, reaching far beyond the Xbox One console install base. The benefits are there, but that doesn't mean Microsoft won't have to renegotiate a lot of its licensing deals.

Game developers and publishers are undoubtedly going to want a say in how their IP and content is monetized and streamed, and even middleware and video game engine platform holders may disagree about the way their technology is being used. EA and other companies are also exploring building out their own competing streaming services, and may simply not want to support Project xCloud for a variety of reasons.

I expect Project xCloud will have a ton of content when it eventually launches later in 2019 or 2020, but the place to play every Xbox game will likely remain on the home console platform for the foreseeable future.

5. Serving all gamers

Philosophically, I simply believe that Microsoft wants to serve all of its customers, no matter how they want to play. The Xbox Adaptive Controller is an example of a device that Microsoft invested in, not to make heaps of cash, but simply because philosophically they want to serve gamers whoever they are, wherever they are, and whatever they need.

Xbox hardware will remain the best way to experience the ecosystem.

Microsoft has made no secret of the business reality of Xbox (and consoles in general), that you make money selling games, rather than consoles. However, if there are many millions of gamers who still want that home console experience, Microsoft would be handing them all over to Sony and other competitors if it opted to ditch that platform. This is all about giving gamers options, which is why Microsoft is exploring additional SKUs like the Xbox One S "All Digital Edition," without a disc drive, and subscription services like Xbox Game Pass (opens in new tab).

Even if we end up in some bizzaro world where Project xCloud and similar streaming services become the preferred way to play games by most people, Xbox hardware will remain the best way to experience the ecosystem. It will feature the best, uncompromised visuals, perfect for those large TV sets in your living room. Just as Spotify and Netflix failed to kill CDs, movie theatres, Blu-ray, and live shows, Project xCloud won't kill Xbox hardware, simply because Microsoft will continue to want to offer the best experience possible.

Xbox hardware isn't going anywhere

The push to digital and streaming services may give console traditionalists cause for concern, but it really needn't. Even if you have no interest, and no inclination to give Project xCloud a try, the access to the ecosystem Microsoft could (potentially) bring to the platform will be unprecedented. And with that access comes more users, more cash, and more re-investment in content, such as games.

With Project xCloud comes more users, more cash, and more re-investment in content, such as games.

Microsoft and its real competitors, namely Google, TenCent, Amazon, and other large tech companies are gearing up for a streaming platform war in the near future. Opting to sit out this battle would harm Xbox in immeasurable ways, particularly if game developers see the benefits of ecosystems that provide this sort of delivery option, versus platforms that don't. Google is undoubtedly exploring partnerships with the big publishers for its own streaming platform, and will undoubtedly leverage its advantages, such as YouTube and Google search, to try and draw the casual audience away from consoles with the allure of pure convenience. The difference between Microsoft and Google, though, is that Google isn't beholden to the traditional console hardware platform, and would happy crush it into irrelevance if it meant more money for them.

Modern Microsoft has shown that it has a different philosophy. I firmly believe that despite not shying away from the coming streaming platform war with tech companies, Microsoft will continue to serve traditional gamers as long as there are enough users who still want that experience.

Jez Corden is a Senior Editor for Windows Central, focusing primarily on all things Xbox and gaming. Jez is known for breaking exclusive news and analysis as relates to the Microsoft ecosystem while being powered by caffeine. Follow on Twitter @JezCorden and listen to his Xbox Two podcast, all about, you guessed it, Xbox!

11 Comments
  • Well the only people claiming this are fanboy of a particular competitors gaming console. The fact that MS announced at E3 that they were already hard at work designing Scarlett should be enough information that they aren't stopping hardware. And the Surface team is the team building Xbox consoles now. With their incredible knowledge at getting as much power as they can, whilst keeping it running cool and in a small design. Like the One S and One X, Next Xbox will be a beast bit of kit to boot. Rumour is Arcturus GPU (a whole Gen above Navi), 1gb of off die Cache, and 14 TFLOPS for the Anaconda. Zen 2 CPU with a brand new tech from AMD called Hyper Scheduler also. Lockhart rumored at 9 TFLOPS. Still Arcturus GPU though. If this rumour holds true. It will be a big step up in features for visuals over Navi GPU set. https://www.techradar.com/news/xbox-scarlett-might-the-first-console-wit...
  • Hyperthreading is something that's been in intel chips for a while. It's also patented by Intel. AMD does already have their own version.
  • My mistake. Not Hyper Threading. Here is the post by the person that leaked the Bios devkit screen. "To be clear this is sent to me from someone at microsoft xbox software division fake or real, i have no clue , he said they're experimenting with some kits sent recently from amd and that there's some Zen2 variants that do away with traditional SMT of 2 threads per core and amd is experimenting with new way to maximize cpu usage with something called HyperScheduler, and currently they optimizing their compiler to better handle that and about that L4 cache, its eDRAM located outside the Zen2 die, designed to compensate for the high latency of having GDDR6 as the system RAM" The L4 comment is in reference to the Bios screen showing 1gb of L4 Cache. So he explains how this is possible.
  • Personally, I hope they keep making Xbox consoles. Competition is good and I don't want Sony to have a monopoly in the "more powerful console market".
    I think the concern is that with the recent rumours that they'll have XB's exclusive on the rival's console there would be even less reason to buy the console. The fear after that is that it'll lead to drop in sales and revenue which would lead to the slow dead of the console.
    That's not what I hope personally but that's the fear...
  • I'm kind of in this mindset, it won't happen next generation but possibly the one after that, Microsoft will eventually go all in on streaming and subscription based gaming. Why would they bother selling a console for 200 bucks if they can get 10 bucks a month out of people for 5 years, plus Gold, plus whatever else, et cetera. It also explains why Microsoft is buying up big in terms of developers, getting more of their own games onto the system so that once they migrate over it won't matter about third party developers because they will be covered by whatever system the Xbox service is running on. This makes the most sense as to where Microsoft will eventually end up, but again, I'm thinking we are a good ten years away from this happening. In fact, logically, it makes sense for all gaming companies to go this way, why spend R+D on gaming systems (which for most manufacturers are net losses with each sale) when instead you could just sell a person a controller and they hook into your service direct from their TV.
  • Spot on. Yeah it will take time. Maybe 10 years is a good call before Consoles really take a back seat to services. By 2030 consoles may not be as viable as it. Is today. For now it's smart for a Company to do both. Establish the streaming sector whilst still making Hardware. I absolutely 100% don't see Xbox services on Playstation. It's a direct competitor. They wouldn't be building a console if it was going on PS5. Switch isbt a direct competitor. That benefits both parties.
  • But if their games are on all platforms then why get an Xbox? Just get a PS whatever and get their exclusives as well as Xbox's. As people start doing this there will be a day when Gold and Gamepass memberships on the Xbox drop to a number that doesn't make it worthwhile to pour money into R&D and manufacturing just to get that money as the Xbox traditionally sells at cost.
    Yes they could still manufacture just as a market recognition thing but if Gamepass, Xcloud and their gaming studio's (recently re-branded to Xbox gaming Studios by the way) take off that will be less and less of a good reason. The data centre argument about xbox's is weak as they could easily virtualize all that, I mean that is what they do as a business.
    Remember in the end it is all about what is most profitable for MS not for us. It may never happen but if your scenario of Xbox games on ALL platforms comes true then it is a high likelihood and we could be stuck with Sony dominating the more mature console market which would be a dark day - competition keeps these guys in line.
  • It's not going to be in Playstation. I guarantee you. That part of the rumour is wrong. It makes no viable business sense to make a competing console against Sony and then let them have your exclusives. Switch isnt competing. So it wouldn't matter on that. Handheld are totally different. 99% of media rumiurs say it's not coming to Playstation.
  • > But if their games are on all platforms then why get an Xbox?
    (Maybe) you don't, but you will be in the Xbox's ecosystem. The more a user invest their time to build their game lib, the more a user spend time playing and saving progress on Xbox Live, the harder a user can turn to other platform. If your friends are playing AAA multiplayer games on their phones or notebooks, wouldn't you want to join them? Wouldn't they invite you to join'em? If people are gamepad gaming on their phones in the coffee or on the bus, free ads? 1 copy runs on all Xboxes, on PC (x86, x64, arm64 and future HW architectures ←what "Core" is about right?), on phones, on (rumored) Switch vs 1 copy runs only on PS4, how do you justify your purchase? What will happen to iOS an Android if your app and iap purchase is bound to your device? All your purchases reset every time you change a phone? There'll be nothing there to prevent a user from jumping ship.
    And now there's no resets on Xboxes anymore. So yeah, even if you don't buy a Xbox, you will be in thier ecosystem. And if you want a hassle free best gaming experience (Dolby Vision / Atmost, Freesync and whatever future can offer) in the living room? "Game Play Best on Xbox"? That's MS's new business model and plan tbh.
  • Of course MS will continue to make hardware and so will Sony and Nintendo. Anything other than that would alienate most of their userbase and I don't mean the hardcore fans alone. Most people all over the world still don't have good internet bandwidth thus making any streaming service not feasible to use. As long as the internet infrastructure globally won't improve dramatically there simply won't be any streaming replacement for traditional consoles. At least not from Sony, Microsoft or Nintendo.
  • I think the simplest answer is, we still need a device to run our games natively, till the day we can stream, cheap, reliably, with no visible latency on a flight. Maybe another 10~20 years? PC gaming isn't always smooth. Apex doesn't work well with some cpus. 3rd party SW might break system app (e.g. Windows Mixed Reality Portal). $700 gpu might cause issues for some. LAB QA tests != real life environment. Too many cooks can spoil the broth. For majority, console gaming is the simplest solution. Relatively, much lesser hassles. For devs (and console HW/OS maker), it's relatively easier to replicate "1" user's system environment and debug for him/her, since everyone on the planet are forced to uses the very same combination of HW, OS version, driver version, plus, no system tampering by user and 3rd party SW. So, till the day we human can access to a quality, cheap, high speed internet available everywhere we go, across continents... we still need a local solution. xCloud for current Xbox user is just a bonus feature, for convenient (to generate ads, news time). The other mission for xCloud, is to bring in more people and their friends to Xbox ecosystem. Console shipment isn't MS focus (and it's not important if you have other ways to bind your users to the ecosystem), user's investment (money to build game lib and time to generate game saves) and ecosystem is the new focus.
    But still, you need to provide a higher tire... for fans. Game Play Best on Xbox. I don't think MS would want to give up that title (MS have money, and HW iterates, Xboxes will always top their competior), more like a spiritual thing, like Surface. There's no reset on Xbox console gaming business anymore. Cross-gen-play/save is the new normal. KBM support + Asia office (with Azure knowledge is in the job description)? I think I might know what they are trying to do in Asia. Not for the sake of Japanese studios tho, there's longer term / bigger money out there.