It looks like Microsoft has been sacrificing Xbox sales in order to focus more on Cloud content. That’s what an internal email has recently revealed. It was made public as part of the ongoing FTC v. Microsoft case over the latter’s $68.7 billion proposed acquisition of Call of Duty publisher Activision.

Although the term ‘Console Wars‘ seems to be a thing now, made evident in the current legal battle, it appears as if Microsoft had other plans for its newest line-up of gaming devices. Did it even want to compete with Sony on the hardware front?

Why did Microsoft want to downplay Xbox Series X for xCloud?

It was done to invest in cloud gaming content than to emphasize the sales numbers of the Series X. Yes, the latest console, which was released nearly three years ago, has been facing a slightly reduced priority from Microsoft. The internal email exchange between Xbox chief Phil Spencer and the CFO Tim Stuart has unveiled this information.

In the email, the two individuals discussed the reasons for the lowered console volumes. Mr. Spencer revealed that the company had a “yield miss for Scarlett”. The latter is the codename for Series X\S consoles. Microsoft had slashed compute units on the Xbox Series X silicon from 56 to 52. It was basically done to improve the production output. However, the target for hardware production was still missed. The email, below, states this information.

Moreover, the company had lots of plans to focus on Cloud content. In just one year of the Series X’s debut, Microsoft had already upgraded the Cloud Gaming servers with customized Series X hardware. It was done to make frame rates better and reduce the overall loading time.

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Most importantly, the email exchange reveals how a tradeoff was made to spend more on the Cloud rather than increasing the volume of Series X.  “From a strategy perspective I believe in our tradeoffs for Cloud and Content in Gaming over console volume,” said Phil Spencer. Although he stressed on keeping in focus the console’s volume, the clear strategy was to grow the “long term ambition” regarding xCloud.

Spencer mentioned that doing this was important because competitors like Amazon and Luna didn’t “have the console strength we have giving us developer engagement”, a larger community, and a big catalog of content.

Source: The Verge

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