Is Microsoft Really Preparing to Ditch Xbox Consoles Forever?

The rumor mill surrounding Microsoft’s gaming division has begun to spin faster than ever, and this time, it’s not about another Game Pass price increase – it’s about the potential end of Xbox as we know it.

After raising the price of Xbox Game Pass by 50% just last week, new speculation suggests Microsoft might be preparing for a radical transformation of its gaming strategy, one that could see the company stepping away from hardware entirely and focusing exclusively on publishing and cloud services.

The latest claim originates from leaker SneakersSO, a name already familiar to gaming communities after correctly leaking Microsoft’s earlier plans to port several Xbox exclusives to rival consoles. In a recent NeoGAF post, SneakersSO stated that plans for the next-generation Xbox console – once described as ‘really concrete’ – are now ‘up in the air.’ The development is particularly surprising given that production for the new console was expected to begin in 2026, targeting a 2027 release window. If true, Microsoft may be reconsidering whether to proceed with another generation of Xbox hardware at all.

According to the leak, Microsoft’s leadership is leaning toward a future where Xbox becomes more of a software ecosystem than a device. The company reportedly plans to double down on its most profitable franchises – Call of Duty, World of Warcraft, Minecraft, Candy Crush, and Forza Horizon – while making Xbox Cloud Gaming the true home of the brand. In this vision, Game Pass would evolve into a gateway for xCloud access, eventually serving as the subscription hub that lets users play Xbox titles anywhere, from smartphones and tablets to smart TVs and even competing consoles. Essentially, this would mean Microsoft is pulling a SEGA – exiting the console hardware race for good.

While the strategy aligns with current industry trends, where cloud gaming and cross-platform services dominate long-term forecasts, the emotional impact on the Xbox fanbase would be enormous. Microsoft has spent over two decades building its hardware legacy, promising fans ‘the most powerful generation leap ever’ in future consoles. Moreover, the company signed a multi-year partnership with AMD earlier this year to collaborate on next-generation hardware, including consoles and handheld devices. Dropping hardware development now would not only disrupt that deal but also betray the expectations of millions of players who rely on backward compatibility to access decades of Xbox game libraries.

Still, there are practical reasons Microsoft might take this route. Xbox Series X|S sales have steadily declined, lagging far behind Sony’s PlayStation 5 and Nintendo Switch. Shifting to a pure software and services model could save billions in R&D, production, and distribution, while letting the company monetize its vast IP library across multiple platforms. From a business standpoint, focusing on cloud and multi-platform releases may prove far more sustainable than fighting for a shrinking slice of the console market.

However, this remains just a rumor – albeit one gaining credibility. Renowned journalist Tom Warren from The Verge recently confirmed during an appearance on the Xbox Era podcast that SneakersSO is indeed familiar with internal Xbox plans: “I will say he knows a lot of what goes on internally. I don’t think he’s a bad source.” That alone has stirred fresh debate among players, investors, and analysts. Could Xbox truly abandon consoles? Or is this merely a temporary pivot as Microsoft redefines what the ‘Xbox platform’ really means in the cloud-first era?

Whatever the truth, one thing is clear – if Microsoft truly leaves the hardware business, it will mark the end of an era that began in 2001 with the original Xbox. The brand that once challenged PlayStation for dominance might soon exist purely in the cloud, reshaping not just how we play games, but what the word ‘console’ even means.