Xbox CEO says console demand is outstripping supply—but sales continue to drop

Imran Khan,Contributing Editor

October 29, 2026

schedule3 Min ReadImage via Xbox

At Microsoft's investor call last night, Xbox CEO Asha Sharma spoke about the unit sales of the Xbox, stating that console demand is higher than supply and indicating that players want to buy Xbox units but they are simply not finding any available, later resharing her comments on X (formerly Twitter). But that claim may clash with Microsoft's own financial results.

Sharma's claim is that, for the quarter being reported in these recent financial results, the lower sales of the Xbox compared to previous sales performance, is because they are unable to manufacture or supply enough console units, while also pointing out that the overall decline has lessened between quarters when compared to the previous year.

Beyond Sharma's initial statement, which focuses on revenue, the financial results report that Xbox hardware revenue has fallen 14 percent year over year this quarter, despite the price going up. For demand to be outstripping supply, the hardware revenue should be seeing big gains, not the relatively modest ones shown by the publicly available numbers.

While local stock is always going to vary depending on a number of factors, cursory checks on supply both locally and nationwide does not indicate that Xbox Series X or Series S are particularly difficult to find in retail environments at present, so it is unclear what Sharma means about demand outstripping supply. As prices for the console continue to go up seemingly driven by a global memory shortage, it is possible a spike in demand in anticipation of high-profile releases like Grand Theft Auto VI might be occurring to head off future price increases from the consumer end.

A silver lining on the cloud

These financial results are the first major quarter reported since Xbox's much-vaunted reset, which seeks to get the division back to profitability by cutting jobs across all of Xbox. It may be a little too soon to tell the full effects of cutting 1,600 jobs—with another 1,600 left to go by July 2027—there does not appear to be a meaningful improvement in Xbox's numbers from the large-scale pivot.

As previously mentioned, Xbox content and services revenue was down 2 percent, which saw declines in third-party content and Xbox Game Pass, though the latter may be the direct effects of the April price cut. The Devices and Consumer segment of Microsoft reported that the cost of revenue "declined 8 percent driven by lower amortization of intangible assets from the Activision acquisition." In other words, intangible assets acquired with the purchase of Activision, like trademarks and patents, are assumed to be worth less now than they were when Microsoft acquired the video game publisher.

One bit of good news for the company is that Microsoft Cloud revenue hit a milestone goal of $63.9 billion, accelerating to 30 percent growth year-over-year. Both cloud and AI initiatives are buoying the company overall, pushing it to better numbers over the previous year even as divisions like Xbox continue to drag.

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About the Author

Imran Khan

Contributing Editor

Imran Khan has been in the games industry in various forms for over two decades. He has been a former senior editor at Game Informer, a professional loudmouth at Kinda Funny, and news director at Fanbyte. He has also been doing PR for Vicarious PR and Head of U.S. PR for Japanese VR studio MyDearest, in addition to Producer work on their latest title Brazen Blaze.

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