"Xbox sales have been tanking for a while now - and the story hasn't gotten any brighter. Microsoft just released its Q1 2026 earnings and Xbox hardware revenue was down 29 percent year-over-year. Last quarter, it was down 22 percent. Down 29 percent in the first two quarters of 2025, down 42 percent in Q4 of 2024... You get the picture."
"It's Azure and cloud services that remain the driving force behind Microsoft's ascent. The growth of its intelligent cloud services is substantial. Revenue increased 28 percent year over year to $30.9 billion, with Azure specifically growing 40 percent. More broadly, Microsoft Cloud revenue was $49.1 billion, an increase of 26 percent from Q1 2025. The company's cloud divisions and Azure have been growing steadily for several years now."
Xbox hardware revenue declined 29 percent year‑over‑year in Q1 2026 after prior declines, and console prices rose, with the Series X starting at $599.99. Microsoft shifted toward an "Xbox everywhere" strategy focused on services and content. Content and services revenue grew only one percent year‑over‑year. The company pursued roughly 30 percent profit margins, leading to layoffs and cancelled projects. Q2 outlook anticipates continued Xbox hardware declines and low-single-digit content and services growth. Windows OEM and Devices revenue rose about 6 percent. Intelligent cloud revenue increased 28 percent to $30.9 billion, Azure grew 40 percent, and Microsoft Cloud totaled $49.1 billion (up 26 percent). Total revenue reached $77.7 billion with net income of $27.7 billion.
Read at The Verge
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