Microsoft is raising the price of its Xbox consoles again, blaming a sharp increase in the cost of memory and storage driven by demand from artificial intelligence data centres.
The increase
From 1 August, prices will rise worldwide:
- 512 GB models: up $100.
- 1 TB models: up $150.
It is the second increase in less than a year, after Microsoft raised Xbox prices in the United States by between $20 and $70 last October.
The reason
According to Microsoft, the price of the memory and storage used in consoles has more than doubled, and the company expects it to keep rising over the next year. It said it had hoped to avoid another increase and had spent months negotiating with suppliers before taking the decision.
The AI effect
The underlying cause is the boom in artificial intelligence. Companies building AI data centres are buying enormous quantities of memory chips and solid-state drives, and manufacturers have shifted production towards the high-end components used in AI servers. The result is a shortage and rising prices for the memory used in consumer electronics, from PCs and phones to consoles.
Why consoles are hit hard
Consoles are often sold at little or no profit, with manufacturers relying on game sales and subscriptions to make money. When component costs rise, they have little room to absorb the increase without raising prices.
The market reaction
Microsoft’s shares fell by around 2% after the announcement. Many players reacted with frustration on social media, warning that the latest consoles are becoming unaffordable for many families.
A wider trend
Microsoft is not alone. Other manufacturers of consoles and electronics have also raised prices or warned of increases as memory costs rise. For consumers, it means that this generation of consoles, rather than getting cheaper over time as was traditional, is becoming more expensive.
Tips for buyers
- If you’re planning to buy, doing so before the price rise takes effect could save money.
- Consider refurbished consoles from reputable sellers.
- Compare subscription services and digital game prices, which can add up over the life of a console.
