Despite its $500 price tag, Xbox One X will not net a profit for Microsoft

Coming off of the newly-named Xbox One X's reveal, Microsoft is running on quite the high. It is evident from all of the reveals from the conference and the fact that several major companies including Ubisoft are choosing to show off gameplay demos on the console, that its power is unquestioned. That said, power comes with price; that price being a hefty $500. But it appears as though Microsoft has gone as low as they can not to be hit with a loss on the console's eventual sales.

In an interview with Business Insider, Phil Spencer revealed that Microsoft would not be making a profit off of the Xbox One X's sales, simply saying "No," when asked. The ensuing follow-up question inquired as to the possibility that the company was taking a loss, to which Spencer responded, "I didn't answer it that way."

As it turns out, selling games are where Microsoft makes their money. Spencer explained:

I don't want to get into all the numbers, but in aggregate you should think about the hardware part of the console business is not the money-making part of the business. The money-making part is in selling games.

Timing obviously has a lot to do with the financials surrounding the Xbox One X as well. At the moment, the industry is still transitioning to 4K being the standard over 1080p, and there's still a significant number of consumers who still don't own a 4K display. As a result, 4K technology is still expensive to produce, so when you hear Microsoft refer to the Xbox One X as a "Premium Console," that's why.

Xbox One X releases this Fall on November 7th, 2017.

Source: [Business Insider]