Over the weekend, there was a brief frenzy in the gaming space where reliable Xbox insider SneakerSO said that Microsoft’s previously stated Xbox next-gen hardware plans were now “up in the air” after recent developments at the company, which as of late have included huge price hikes for both Game Pass and the hardware itself, and certain retailers no longer carrying Xboxes at all. The implication being that Xbox was about to get out of hardware entirely.

Microsoft was quick to respond to this, pointing toward previously-announced news of building new hardware with AMD:

“We are actively investing in our future first-party consoles and devices designed, engineered and built by Xbox[…]the community can revisit our agreement announcement with AMD.”

If we take Microsoft at its word and first-party hardware is still coming, the question may need to be asked. Should Microsoft actually keep making Xboxes?

This is, of course, a company question, not a gamer question, as I mean, who cares if Microsoft wants to release a potentially underperforming console for the third generation in a row? In terms of strategy, there’s a lot to consider.

The Xbox brand is damaged at this point. These recent price hikes are the cherry on top, but Xbox hardware has been losing out to both Sony and Nintendo for over a decade now, and recent sales estimates indicate that only appears to be escalating. Each new gaming division report says hardware is dropping double digits, while overall, Xbox is making money. Microsoft has long said that Game Pass is profitable.

But that’s part of the question, and part of what SneakerSO originally said, that Microsoft would exit hardware to become software-only and focus on Game Pass and the cloud, putting both on whatever devices it could, including competitors and potential third-party partners like we just saw with its branded handheld. Microsoft has reiterated that it is not doing that pretty clearly.

The problem with eliminating Xbox hardware entirely is that, despite lower Xbox sales than the competition, Xbox hardware represents a huge portion of its Game Pass subscribers at baseline, the largest portion by far. If the idea is to lean more heavily on Game Pass (which is now 50% more expensive), and not make next-generation hardware, that means you have hamstrung millions of subscribers, locking them into either last-gen hardware, PC or the cloud. Maybe third-party hardware if they’re lucky. If the goal is to grow Game Pass instead of shrink it, you can’t take away that core hardware option.

None of this is good. Microsoft is stuck here, either needing to make a piece of hardware that is so powerful and so feature-rich and so appealing that it actually has a chance to come back against its rivals, or having another second (third) best generation just to retain Game Pass subscribers who don’t want to play anywhere else. Microsoft is declaring, for now, at least, it’s pressing forward either way.

Follow me on Twitter, YouTube, and Instagram.

Pick up my sci-fi novels the Herokiller series and The Earthborn Trilogy.