Microsoft (MSFT.US) plans to release the next generation Xbox console in 2027, launch in 2028 and sell for as much as $1,800

The Zhitong Finance App learned that Microsoft (MSFT.US) is speeding up the layout of the next-generation gaming hardware matrix. According to reports, Microsoft plans to launch an Xbox handheld device during the 2027 holiday season and launch the next Xbox console codenamed “Project Helix” during the 2028 holiday season.

It is reported that the new game console codenamed “Project Helix” will use AMD (AMD.US) FSR 4.1 machine learning technology. Xbox CEO Asha Sharma described Project Helix as “a series of devices,” implying that Microsoft's future hardware ecosystem will no longer be limited to a single form. Combined with the “multi-year strategic partnership” reached between Microsoft and AMD last year, this series of devices will most likely be built on AMD's new chips. The report also said that if Microsoft does not adopt a hardware subsidy policy, the price of next-generation consoles may be as high as 1,200 US dollars to 1,800 US dollars.

At the software development level, Microsoft's internal Windows team and the Xbox team had a disagreement over system dominance for next-generation devices. Given that the two sides have had similar frictions many times over the past 25 years, this clash is no surprise. However, current news shows that the Xbox team has regained control over the software direction of the Project Helix project.

Additionally, Xbox's core subscription service Game Pass is also facing major adjustments. According to the report, Microsoft is implementing hierarchical reforms to Game Pass using the Netflix model, plans to launch various options with or without ads, and is considering adding additional service packages for console exclusivity, cloud gaming, and multiplayer modes. This will increase the flexibility of the service, but it is still unknown whether the first-day blockbuster will be included in the subscription and overall price changes.

One of Charles's first steps after taking office was to correct Game Pass's pricing strategy. Internally, she acknowledged that “Game Pass is too expensive for players.” Subsequently, Microsoft not only lowered the subscription price, but also disqualified the launch of the new Call of Duty game on Game Pass. Additionally, Sharma plans to launch a new round of Xbox layoffs this month, and implement further layoffs in November and January to follow.

Under Sharma's leadership, the Xbox management team has been working to improve the division's operations and accelerate its growth. The department has around 14,000 employees, but in recent years it has been plagued by extremely low profit margins and declining sales. In the fiscal year ending June, Xbox's revenue fell 7% to $21.8 billion. According to Microsoft's disclosure earlier this year, the division's “accountable profit margin” (similar to the adjusted profit margin) continued to decline over the past year, falling to only 3% as of June.

Previously, Microsoft had hoped to generate impressive new revenue by acquiring a large number of game studios, but the actual results did not meet expectations. Since taking over the division in February of this year, Sharma has been working to reverse the decline in its business. According to reports, in July, she proposed a plan to cut 3,200 jobs within the next year (about 20% of the total number of employees) and increase investment in game IPs such as “Halo” (Halo) and “Minecraft” (Minecraft).

It is worth mentioning that, according to people familiar with the matter, in recent months, several private equity investment institutions have considered the possibility of acquiring Microsoft's Xbox gaming business. If the deal is reached, the valuation of the business could reach $100 billion to $150 billion. These people familiar with the matter said that such discussions by private equity institutions are only in the preliminary exploration stage and have not evolved into formal negotiations with Microsoft. However, it also shows that if Microsoft doesn't make good progress in reversing its troubled gaming business, the company is still likely to find buyers. In response, a Microsoft spokesperson said in a statement: “Xbox will not be sold,” and declined to comment further.