After Apple, Microsoft raises its Xbox console prices
What's the story
Microsoft has announced a major price hike for its Xbox consoles, effective globally from August 1. The company said that the price of the 512GB models will go up by $100 while the 1TB versions will see a rise of $150. This comes shortly after Apple also raised prices across its hardware lineup due to similar industry-wide pressures.
Price details
The new prices of Xbox consoles
The new pricing structure will see the Xbox Series S 512GB go up from $399 to $499, and the Series S 1TB jump from $449 to $599. The more powerful Xbox Series X will also be affected by the price hike. The digital version will now cost $750 instead of $599, while the disk version's price has been increased from $649 to a whopping $800.
Cost factors
Microsoft cites skyrocketing memory chip costs
The price hikes are largely attributed to the skyrocketing costs of memory and storage chips. Microsoft has said that these components have become more than 2.5 times more expensive, with prices expected to even climb further by 2027. The company warned that AI companies are buying huge amounts of advanced memory chips for their large-scale data centers, leaving hardware manufacturers with much higher production costs.
Financing options
Expanding access to financing options and lower-cost hardware
To soften the impact of these price hikes, Microsoft is expanding access to financing options and lower-cost hardware. The company said it is "working on new programs to provide previously played consoles at lower prices." Customers buying eligible Xbox hardware through Microsoft Stores will have more access to buy now, pay later programs, while Amazon shoppers can qualify for up to 12 months of 0% Annual Percentage Rate (APR) financing on eligible purchases.
Market effects
AI boom's impact on consumer electronics
The price hikes from Microsoft and Apple highlight the impact of the AI boom on consumer electronics. As tech companies invest heavily in larger AI systems, demand for advanced memory and storage chips has surged, tightening supply chains and pushing costs higher across the industry. This could lead to potential supply challenges for gaming companies as they compete with AI firms for the same memory and storage components needed for their consoles.