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Andrew Hoyle/CNET
Microsoft has always sold Xbox consoles at a loss, an executive confirmed during the Epic Games v. Apple trial on Wednesday, as previously reported by Business Insider. An Epic lawyer asked Microsoft’s vice president of Xbox business development, Lori Wright, about what profit margins the company has on its consoles.
“We don’t — we sell the consoles at a loss,” she replied, before confirming that Microsoft has never earned a profit on console sales.
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Microsoft has been making games consoles since the original Xbox in 2001. It released the Xbox Series X and S last November.
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It’s not an unusual strategy for companies to sell consoles at a loss — they typically act as a loss leader for sales of games, accessories and subscription services like Xbox Game Pass, especially at the beginning of a console generation when component costs are high. The cost of making consoles tends to drop over their lifespan, but companies cut the retail prices of their consoles as well.
Microsoft didn’t immediately respond to a request for comment.
See also: Xbox Series X restock: Inventory updates from GameStop, Best Buy, Target, Amazon and more
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