Xbox Having Trouble with Streaming-Only Console Due to High Costs, Wants to Hit $99 to $129 Price Point

Image: Microsoft

A previous version of Microsoft’s streaming-only Xbox device, codenamed Project Keystone, was put on hold because it was too expensive to produce, according to Xbox boss Phil Spencer, who shared the news with The Verge in a recent episode of the Decoder podcast and revealed that Microsoft had trouble hitting its goal of creating an affordable system that consumers could purchase for only $99 to $129.

The device would have served as a pillar of Xbox’s Play Anywhere initiative for bringing Xbox gaming to more people, allowing players to stream Xbox games without a console, but it’s unclear when it’ll surface now, although Spencer has provided some assurance that Microsoft remains committed to releasing it.

Spencer inadvertently (or purposely) teased the device last month, tweeting a photo that included a stick-like streaming device on the top shelf under a sword.

Here’s what Spencer had to say about Project Keystone, as transcribed by VGC:

The console we built that now people have seen, Keystone, was more expensive than we wanted it to be when we actually built it out with the hardware that we had inside, and we decided to focus that team’s efforts on delivering the smart TV streaming app.

With Keystone, [we’re] still focused on it [and] when can we get the right costs, but when you’ve got Series S at $299, and like during the holidays you’ll see some price promotion, you’ll obviously have Series X higher, I think in order for a streaming-only box to make sense, the price delta to S has to be pretty significant.

I want to be able to include a controller in it when we go do that. So, it was really just about if we could build the right product at the right price, or if we can’t, how can we focus the team’s effort? And we decided to go do the TV app with Samsung and we’re really happy with the results there.

I don’t want to announce pricing specifically, but I think you’ve got to be $129, $99, like somewhere in there for that to make sense in my view, that we just weren’t there. We weren’t there with the controller. And I love the effort. The reason it’s on my shelf is the team rolled up their sleeves and in nine months they built that thing. And a bunch of us took it home and it worked. It worked really, really well.

When you are building new products, it’s always about, do you have the right design? Do you have the right user interface? Do you have the right customer proposition? And the customer proposition includes the price, and I think all of us knew that we were a little out of position on price.

Not to go into the hardware design, but if this thing’s standalone, I mean it’s not living on the power source of the TV, and the integrated circuits that are already in the TV, you have to do everything bespoke.

But we made some decisions to make it easy. The thing, when it is turned on, it looks like an Xbox, the user interface, everything works, but some of the silicon choices that we were making at the time we were designing just didn’t let us hit the price point that we wanted to hit.

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