A pair of Microsoft home video game consoles, including an Xbox Series S (L) and Xbox Series X, taken on October 27, 2020.

Future Publishing via Getty Images

The component cost explosion comes for us all, and now two rivals are both feeling the heat to the point where they had to announce dramatic price hikes the very same day.

Due to ballooning costs, Apple revealed a list of hardware price increases ranging from $100 to $300, depending on the device. But in the gaming world, just hours later, Microsoft announced its third price hike on Xbox hardware since late 2025, this time even higher than the last, $100 to $150 increases across the board. And that’s with one SKU that would have been so expensive, Microsoft opted to simply discontinue it entirely.

The third era is as follows, with $100 hikes on 512 GB units and $150 on 1TB units, based almost entirely on storage cost increases globally:

• Xbox Series S 512GB - $400 to $500
• Xbox Series S 1TB - $450 to $600
• Xbox Series X 1TB Digital - $600 to $750
• Xbox Series X 1TB Disc - $650 to $800
• Xbox Series X 2TB – Has been discontinued entirely. I imagine Microsoft did not want the headline that it was now selling a console that cost over $1000, which may have been the case.

Microsoft has not been alone in these dramatic increases. Its rival Sony has had to increase the price of PS5 digital from $400 to $600 since launch, and its PS5 Pro is now the most expensive (non-Steam Machine) console on the market at $900, just in time for the console-only Grand Theft Auto 6. While the focus is on Xbox, it’s entirely possible that more PlayStation price hikes could be to come. Nintendo, meanwhile, has skated by only increasing the Switch 2’s price by $50, from $450 to $500. That could also change.

Xbox explained this increase in a blog post that says storage and memory prices have recently increased 2.5x, and will double again by the fall of 2027. Xbox CEO Asha Sharma previously said these costs have increased 5x from two years ago. So the options are: Sell consoles at an enormous loss, or raise prices so much that sales will clearly crater, even more so than they have already. $500 for a 512GB Series S in 2026, when 5.5 years ago it launched at $300, is absolutely absurd. Though you could make that argument about a PS5 Pro approaching $1,000, even with its power upgrades.

Microsoft saying this will continue until later 2027 at the very least raises questions about the plans for Xbox Helix, which is meant to be some sort of next-gen console/PC hybrid. If a 1TB, nearly six-year-old Series X now costs $800, how far over $1,000 are we talking about here for next-gen consoles, be they Helix or PS6?

All of this, of course, mainly comes back to AI, which is extremely ironic given that it is big tech, including Microsoft, that is sinking billions into the tech that is, in turn, knifing their own products to the point of severe sales drops. But as stated, there is no sign of this slowing down, and every tech company seems all-in on AI indefinitely, no matter what side effects it may have, including what we’re seeing here.

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