Microsoft sacrificed Xbox Sequence X gross sales for ‘long run ambition’ within the cloud

Microsoft has been sacrificing rising its Xbox Sequence X / S gross sales numbers since launch as a tradeoff for funding in cloud and gaming content material. In an inside e mail trade between Xbox chief Phil Spencer and Xbox CFO Tim Stuart in December 2020, the pair mentioned the explanations behind decrease Xbox console volumes. The e-mail has been revealed as a part of the FTC v. Microsoft listening to.

Spencer admits that Microsoft had a “yield miss for Scarlett,” the codename for Xbox Sequence X / S consoles, however that it and the delay to Halo Infinite weren’t the “principal components in our console shortage” in the course of the preliminary launch interval. Microsoft had lower the compute models on its Xbox Sequence X silicon all the way down to 52 from 56 to enhance manufacturing yield, however the firm nonetheless missed a goal for {hardware} manufacturing of the console. Microsoft additionally had a strategic guess on cloud that it seems to have been holding again chips for.

Xbox Cloud Gaming inside e mail thread. Picture: Microsoft

The e-mail trade references a tradeoff on spending cash on Xbox console quantity or content material and cloud bets. “From a method perspective I consider in our tradeoffs for Cloud and Content material in Gaming over console quantity,” says Spencer. “With our technique and alternative console quantity will nonetheless be the factor we constrain to develop our long run ambition.”

Microsoft has needed to make investments cash into constructing out its cloud infrastructure for Xbox Cloud Gaming, notably because it’s primarily based on customized console elements. “I consider our investments in content material and xCloud are essential to realizing our potential in gaming,” says Spencer. “Amazon Luna and Google Stadia don’t have the console power we have now giving us developer engagement, gaming neighborhood, and catalog of content material.”

Microsoft was additionally engaged on a separate “devoted” model of Xbox Cloud Gaming final yr. However that “devoted xCloud SKU” isn’t essentially launching anytime quickly. In testimony in the course of the FTC v. Microsoft listening to final week, Sarah Bond, head of Xbox creator expertise, mentioned Microsoft was “extra clear on the prices” associated to Xbox Cloud Gaming and the recognition of the service, so a devoted model wasn’t at present being labored on.