Microsoft Has a $1,000 Problem With Its Next Xbox

Microsoft Corp. (MSFT, Financials) wants its next Xbox to do more than the current one. The problem is what gamers will pay for it. Project Helix is Microsoft's next-generation console, designed to play both Xbox and PC games. That wider ambition could make it more powerful and flexible. It could also make it expensive. Ampere Analysis estimates that if the next Xbox and Sony's PlayStation 6 launch around $1,000, their combined sales during the first five years could be as much as 38% below the current generation. That is a serious problem for Microsoft. Console hardware is only the beginning of the relationship. Microsoft also makes money when players buy games, subscribe to Game Pass and spend inside the Xbox ecosystem. Fewer consoles can mean fewer customers for all of those businesses. One option is giving buyers a cheaper starting point and letting them add features later. But ideas such as modular storage, removable disc drives or upgradeable computing remain possibilities rather than confirmed Project Helix features. For Microsoft, the challenge is becoming simple. Project Helix needs to feel like a major upgrade. It just cannot be priced like one.