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Microsoft announced Thursday that it will raise prices on its Xbox gaming consoles for the third time in little over a year, blaming a rapid and severe surge in the cost of storage and memory components that the company says shows no signs of easing.
The new prices take effect Aug. 1. The 512-gigabyte models will increase by $100, while the 1-terabyte versions will climb by $150, pushing the top Xbox configurations to nearly $800. Microsoft also confirmed it will discontinue its 2-terabyte model entirely.
The company said it had resisted further increases as long as possible. "We hoped another price increase would not be necessary, and we have spent the last several months working with suppliers on options," Microsoft said in a statement, adding that console storage and memory prices have risen by more than 2.5 times and are expected to double again by the fall of 2027.
Microsoft argued that the component crisis falls with particular weight on the gaming console market, where manufacturers have historically sold hardware at a loss, recouping costs through software sales and subscriptions. "Unlike phones, computers, speakers, and other consumer devices, consoles are typically not sold at a profit, but instead for less than they cost to make," the company said.
The Aug. 1 increases follow two previous rounds of Xbox price hikes, the first in May 2025 and a second in October 2025, reflecting mounting pressure on hardware margins across the industry.
Microsoft is not alone. Sony and Nintendo have both implemented price increases on the PlayStation 5 and Nintendo Switch 2, respectively, as tariff pressures and component shortages squeeze console makers across the board. The moves signal a broader recalibration of consumer pricing expectations in the gaming hardware market, where sub-$500 consoles were long considered a commercial baseline.
The memory crunch has extended well beyond gaming. On the same day as Microsoft's announcement, Apple said it would raise prices on its Mac computers and iPad tablets, also pointing to the component shortage as the cause. Apple attributed the demand spike in large part to the rapid expansion of artificial intelligence data centers, which has created intense competition for the same memory and storage chips used in consumer electronics.
"The rapid expansion of AI data centers has created an extraordinary surge in demand for memory and storage," Apple said in a written statement, describing the situation as an "unprecedented challenge" for the industry. The Cupertino, California-based company said it had absorbed component cost increases for as long as it could before concluding that price increases were unavoidable.
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