Given latest information concerning the state of the Xbox Collection S and X consoles, it shouldn’t come as a shock that Xbox’s {hardware} gross sales proceed to nosedive.

Microsoft shared its Q1 2026 earnings, revealing that Xbox {hardware} income was down 29 % yr over yr.

This newest monetary information paints a bleak image for the {hardware} division, because the numbers hold getting worse relatively than higher. Final quarter, {hardware} gross sales had been down 22 %, down 29 % for the primary two quarters of 2025, and down 42 % in This fall of 2024.

Issues will solely get tougher as the corporate additionally has to deal with Donald Trump and his blatant abuse of tariffs, which have pressured Microsoft ot make some unpopular choices like elevating the worth of the Collection X console to $599.

The corporate has additionally applied a brand new technique with its “Xbox all over the place” initiative, which promotes the concept any system that may play its video games within the cloud is an Xbox.

Microsoft’s gaming division has additionally begun ditching the thought of unique video games and, mainly, conceded the “console wars” when it introduced that Halo: Marketing campaign Advanced, a remake of the primary sport within the franchise, is coming to the PlayStation 5.

Regardless of all of the dire information about {hardware} gross sales, Microsoft shouldn’t be out of the console enterprise but. The corporate simply launched two new handheld units in partnership with ASUS, the ROG Xbox Ally and Xbox Ally X.

Firm heads like Xbox President Sarah Bond and CEO Satya Nadella have additionally begun teasing the following Xbox console, sharing that it will likely be a premium, high-powered PC/gaming console expertise that may probably embody a number of storefronts, like Steam.

We will see what the long run holds for the corporate.