Xbox Memo Predicts over 5x Increase in Storage and Memory Costs by Holiday 2027

Asha Sharma and Matt Booty from Microsoft's Xbox division took the unusual step of publishing an internal memo this week, titled "Next 100 Days: Xbox Reset". In it, Sharma and Booty detail how they think their revival of the Xbox brand is going, and the various challenges and opportunities await the company in the near future.

The most interesting section for me was on storage price rises, which Asha says doubled between fall 2025 and February 2026, have doubled again between February and June, and are set to have more than quintupled by the 2027 holiday season. It's a similar story for RAM, which of course is made from the same limited supply of flash memory. Moreover, Asha thinks that Xbox is uniquely vulnerable to these pricing increases due to "choices we have made over the last half decade".

I'm intrigued by that, as Series X has the same 16GB RAM allocation as the PS5, while Series S uses less; in terms of storage, the 1TB total is similar between both consoles too. Perhaps this is a reference to existing agreements for SSD/RAM supply, or perhaps an unwillingness by past leadership to commit to purchasing high volumes of these components over long time periods at a set price? It could also refer to having two more distinct SKUs, Series X and Series S, with different board designs and requirements, including split memory pools, in comparison to Sony's more modular and standardised PS5 approach.

Here's that section in full:

We are in a hardware component crisis. When I joined as CEO in February, the price we paid for console storage components was over 2x as high as we paid last fall. These costs have since doubled again. And as we plan for the 2027 holiday season, we expect another significant increase, taking us over 5x the prices we paid only two years earlier. Memory costs have followed a broadly similar trajectory. While the entire industry is facing a components crisis, we believe we have been impacted more greatly than many of our peers due to the choices we made over the last half decade. We are currently unable to make as many consoles as players want to buy, and we need a new business model and partnerships for hardware as we remain committed to Helix.

The entire memo is well worth reading as background information on the Xbox brand and the wider gaming business space, with the pair discussing the need to improve Xbox's infrastructure, spend more on key franchises, continue to compete for attention and reduce costs, the latter likely via layoffs. It's a sobering read, but an important one, I think.

What do you make of the memo? Let me know in the comments below.