Microsoft raises Xbox console prices as component costs soar

Microsoft has reportedly announced that it will raise the prices of its Xbox game consoles, marking a significant shift, hours after Apple declared price hikes for MacBooks and iPads. 

This major move will be implemented on August 1. The Xbox Series S console containing a massive 512GB of storage drive will go up by $100 to about $500. 

Consequently, 1TB models will increase by $150, while the entry-level Xbox Series X will now start at about $750.

The US company said in a blogpost: “The XBOX console prices were increased by $20-$70 in the US.”

Microsoft further clarified that this price increase would not be a sudden decision, adding that the company had spent the last several months working with suppliers on alternative options. 

It has been observed that memory manufacturers such as Micron and SK Hynix have restricted supply, as they are prioritizing high-bandwidth memory for artificial intelligence companies like Nvidia. 

On the other hand, manufacturers are also soaring prices to capitalize on user demand in a bid to maximize broader profit margins. 

These current changes impose a heavy financial burden on consumers looking to buy devices such as smartphones, tablets and computers. 

On Thursday, Apple’s announcement came after CEO Tim Cook told the Wall Street Journal that increased prices had become inescapable. 

In response to these significant changes, Microsoft shares fell 3.5% on Thursday while Apple’s stock dropped 6.1%. According to a post by the Xbox unit, the entire consumer electronics industry is straining under the current components crisis, but resulting effects are particularly hard on consoles. 

The company further said: “Unlike phones, computers, speakers, and other consumer devices, consoles are commonly not sold at profit, but instead for less than they cost to make.”

In addition, Microsoft said the 2TB Xbox Series which was introduced in 2014, will no longer be available for users.