Microsoft’s next Xbox console, Project Helix, has been internally projected to cost between $1,200 and $1,800 unless Microsoft subsidizes it, according to a new Fortune profile of Xbox CEO Asha Sharma. The report also says Xbox plans to release a next-generation handheld by the 2027 holiday season and the Helix console by the holidays in 2028.
Sharma confirmed back in March that Helix will play both Xbox and PC games, and in August she hinted that Helix would be a “family” of devices, so a handheld arriving first fits that plan. The price is the new part. Memory and storage costs have climbed across the industry, driven by demand from AI data centers, and VGC reported last week a claim that the PlayStation 6’s memory components alone could cost Sony more than $680 per console. Microsoft has already raised the price of the Xbox Series X and S by up to $150.
Game Pass Goes À La Carte
Fortune reports that Xbox is planning a major Game Pass overhaul. Instead of picking from fixed tiers, players would choose features à la carte, with add-ons for console-only games, cloud gaming, and multiplayer, all sitting on a tiered structure. That follows Xbox’s move last month to cap cloud gaming at 15 hours and charge for extra playtime.
According to former employees who spoke to Fortune, Game Pass helped Xbox build a subscription business but also ate into sales of its higher-priced first-party games, especially at launch.
A Fight With Windows Over the Handheld
The Xbox and Windows teams have clashed over what software Helix should run. Windows leaders wanted the handheld to use a trimmed-down version of Windows Home, while Sharma’s team wanted to build and control its own software for better gaming performance. People briefed on the dispute told Fortune that a senior Xbox executive threatened to scrap the handheld rather than adopt the Windows build. Xbox now largely controls the direction of the operating system.
Fortune’s sources also say Helix engineering deadlines have been moved up by at least several months, pushing teams to work faster, including with AI. Sharma told Fortune she won’t use AI just for the sake of it and sees it as a tool for specific engineering problems like developer workflows.
More Layoffs on the Way
Sharma has cut 1,868 people so far toward a plan to reduce Xbox headcount by 3,200 over the next year. The next rounds are planned for this month, November, and January, according to people familiar with the plans, though Fortune notes those plans can change.
The numbers behind the cuts are rough. Fortune reports that a Microsoft measure of Xbox’s profit margin sits around 3%, and that current-generation Xbox consoles have sold a little over a third as many units as the PS5, based on third-party estimates. Xbox has about 100 million daily active users, and Sharma’s long-term goal is to reach more than 1 billion people a day.
Is Xbox Being Prepped for a Sale?
Several current and former staff members told Fortune they believe Xbox is being positioned for a possible sale, spinoff, outside investment, or conversion into a subsidiary, and some said they knew of a high-level presentation that explored those options. Since Sharma took over in February, Xbox staff emails have switched from microsoft.com to xbox.com, and Microsoft renamed its gaming division from Microsoft Gaming to Xbox in April.
Microsoft executive Judson Althoff pushed back on that idea. “We would not have put her on a business we intend to sell,” he told Fortune, adding that time will tell.
The next checkpoint is Microsoft’s quarterly earnings report later this month. Sharma told Fortune she expects financial improvements to start showing in Microsoft’s fiscal 2027.
Fortune, VGC, Engadget, GamesRadar
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