Next Xbox will be “premium” and it might be the only way for Microsoft to go

Xbox’s president, Sarah Bond, has come out talking about the next-generation console. Recent reports have indicated that Microsoft is eying a hybrid console-PC system for its next gaming hardware, and Bond’s comments appear to line up with that thinking.

The Mashable interview tried to squeeze a little more out of the Xbox exec, but all she had to say about it so far is:

“Well, I can tell you you’re right, that the next-gen console is going to be a very premium, very high-end curated experience.

“You’re starting to see some of the thinking that we have in this handheld, but I don’t want to give it all away.”

Microsoft has never been in a weirder position than it has now. The business is booming, with record profits and a leading place in the AI race. However, under the surface, the company’s AI push might only net them $15 billion off of a $90 billion investment. It’s forced the hands of the bigwigs at the top to just start slashing everything to the bone.

Xbox has been the biggest victim of the layoffs at Microsoft. In 2024, it shuttered, amongst many, the award-winning studio, Tango Gameworks, only to then have Matt Booty, head of Xbox Game Studios, say that they needed more award-winning games.

This year saw over 9000 people get laid off across the company. That particular round of layoffs in July saw the following:

• The Initiative shut down, taking Perfect Dark with it
• Rare laid staff off, canned Everwild, and lost Sea of Thieves director Gregg Mayles after 35 years
• Around half of the Forza Motorsport developer, Turn 10, was laid off
• Zenimax was hit with layoffs, resulting in a new MMO being scrapped
• Call of Duty studios laid people off
• Around 50% of the Xbox User Research team was laid off
• Head of Child and Family Safety was laid off

Most recently, it raised the prices of Xbox Game Pass, its subscription service, to the point that it caused the cancellation page to crash on its website.

On top of this, the company has been on the back foot with its Xbox hardware since it launched. After the disaster that was the Xbox One, a pandemic, massive development time, game failures, and a shifting tide within the industry, the Series X | S has not met expectations numbers-wise.

At a loss

Microsoft’s Xbox division seems to be at a loss, like a wandering child in the supermarket. It knows it wants success, but it just feels as if they have zero idea of how to achieve it. Confusing marketing campaigns claiming everything is an Xbox, to rebranding a handheld PC with the Xbox name that… doesn’t play Xbox console games natively.

So where does Xbox go from here? It’s had barely any wins in 2025, rightfully so, but there are only a few paths left to take. If Xbox swapped to being a publishing house full-time, it’d become one of the largest on the planet. Who else owns Call of Duty AND Halo?

But here’s the thing, unlike the rest of Microsoft, where hardware doesn’t particularly matter, at Xbox it does. That’s how they get users in the door, potentially subscribing to Game Pass, and it’s partially why they’ve shifted to becoming a third-party publisher.

Microsoft is a services company now, not a tech one, and outside of trying to find methods to inject its blasted AI wherever it can, it’s a large reason why it does the things that it does.

A PC-Xbox hybrid would fuel Microsoft’s business

You know how Windows 10 had its security support ditched? It’s not because of AI, funnily enough. I’m guessing somewhere a Microsoft exec has decided it’s for that, but they announced the shutdown in 2021 before they leapt into bed with OpenAI. No, the reason for funneling people to Windows 11 is to get them on the services train. There’s very little of Windows 11 from Microsoft that’s not connected in some way to a method of draining cash from you over time.

That’s Microsoft’s business. The endless need for growth and to raise market caps is a nightmare to dip into, but it’s what the business is. Numbers and lines, they must go up.

So when Bond says that they’re looking at a “premium” and “high-end” device for the next system, it’s because they have to convert the Xbox into a PC to ensure they continue to do their business. Imagine how much telemetry data they can harvest from you if you’ve got a PC box under your TV with Windows 11 under the hood.

It also potentially compacts down Xbox Game Pass. Since the price rise, Microsoft now has four tiers of Game Pass. The fourth is almost like a “grandfathered” deal, exclusively for PC Game Pass. It not only allows for day one games and Xbox Cloud streaming, but it’s at a significantly lower price of $16.49 over the $29.99 of Ultimate.

By introducing a new Xbox that’s a PC, why keep PC Game Pass? They’ll slash its throat the very first chance they get, and this will be the reason for it. Another service to the mix. I don’t think they’d do something as stupid as forcing an Xbox Live Gold-type subscription for online play after the switch over, however, even if it has been effectively rolled into Game Pass at this point.

Maybe the console space isn’t for Xbox anymore

It’s quickly becoming obvious that Microsoft cannot hang in the low-end console space anymore, either. Costs on hardware are constantly rising, and to stick in the less expensive dedicated console space is becoming risky. With Trump in the White House and a rumored 2027 launch date, things are only going to get weirder in terms of tariffs. You can point to that administration for why five-year-old hardware like the PlayStation 5 and Xbox Series consoles got price raises so late in their life. A genuine first for the industry.

Microsoft won’t be able to avoid tariffs on the next console, but they might not have to wrestle with them so much with the next system. Not that it’s going to avoid a classification of “games console”, which lops on a base tariff, and there’s another impending one coming up, unless China signs something they’ve no obligation to.

It’s clear they’re going to the hybrid route, and if recent leaks are to be believed, the hardware inside will cost a pretty penny. However, I’m curious to see if the prices on the new ROG Xbox Ally handhelds are the testing grounds for what’s to come. $1000 handheld, $1500 console? That’s a low-end PC, and if it can run games better than some low-end hardware can, Xbox might find a new lease on life.

It won’t be about them at that point, though. You can imagine the trailer when it’s announced. After all the Xbox gizmos have been shown, it’ll go something like “PLAY EVERYTHING ON XBOX”, as it shows Steam, Battle.net, and any other launchers. They’re already collating them within the Xbox app, so if you have the “console” that can play everything without limits, that’s absolutely worth the price tag – to you and me.

How will people react to a high cost Xbox?

What I’ll be curious about where Microsoft goes next with the Xbox division is if it can retain its audience with such high-priced hardware. PC gaming is mega cheap once you break it down, but the entry price isn’t anything to sneeze at. As I said in the Battlefield 6 XP Farms piece, it’s quite difficult to gauge how real humans who aren’t embedded online view what Xbox potentially has planned.

Imagine asking your dad when you were 13 for a new Xbox, only to find it’s possibly four digits. He’d laugh and tell you to go away. That’s where I think Xbox will have the most trouble.

All I know is, they’d best get a move on with providing official Xbox and 360 emulation, because I have a need to play Blinx the Time Cat.