Xbox hardware revenue drops to record low of Gen9 Xbox Series generation

Xbox's hardware revenues are down to their lowest point in the Xbox Series generation, and Microsoft's latest results actually represent the second quarter in a row that this has occurred.

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In a not so surprising development, the latest price hike is continuing to impact Xbox console sales. Consumers may be shying away from Microsoft's gen 9 console duo as Xbox hardware earnings recently delivered their lowest results throughout the Xbox Series lifetime.

Based on numbers from Xbox expert and Install Base admin John Welfare, Xbox made around $221 million in quarterly revenues, down more than -30% year-over-year. "Xbox hardware revenue decreased 33% driven by lower volume of consoles sold," Microsoft's latest 10Q report said.

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To put this number into perspective, Q3'26 was the lowest revenue period for Xbox hardware in gen 9, which started in November 2020, and it was also lower than two quarters of Xbox One sales before the new-gen Xbox Series had launched.

These numbers also represent the third straight quarter of hardware earnings declines, and FY26 also delivered the lowest-ever holiday quarter for Xbox Series sales revenues. It's believed that the unpopular hardware price hike, which was then still newly announced, deterred consumers away from the Xbox Series in holiday 2025.

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Interestingly enough, Xbox has prioritized Gen 9, with new Xbox CEO Asha Sharma saying that the company will invest in the current gen with new feedback-driven features. In a company-wide memo, Sharma called for Xbox to "stabilize Gen9 as a healthy and high-quality base."

At the same time, Microsoft is also planning its next-gen Project Helix, which is said to be a first-party Xbox device that can play both console and PC games.

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All Xbox Series consoles are produced at a loss, so a reduction in these earnings does reflect a reduction in potential losses, which isn't a bad thing for Microsoft in the short term. There's a negative margin situation at Xbox (there always has been, no Xbox has been made at a profit) and it's unclear whether or not that will change with the new Project Helix.

There are reports that Microsoft could conscript OEMs like ASUS and Lenovo to make standardized versions of Project Helix PCs, similar to the pre-build systems that some companies already offer...however this hasn't been confirmed, and the logistics could be a nightmare right now with the ongoing RAM component shortages affecting supply and demand prices and availability.