05:59 PM EDT, 06/10/2026 (MT Newswires) -- Microsoft's ( MSFT ) Xbox warned it is facing a hardware component "crisis," with storage costs now more than five times higher than two years ago and another significant increase expected heading into the 2027 holiday season.

The company is currently unable to manufacture as many consoles as customers want to buy, adding that memory costs have risen along a similar trajectory, Xbox said Wednesday on its website in a message to global employees.

Xbox expects to end the fiscal year with an accountability margin of about 3%, down from a year earlier, and said that excluding Activision Blizzard King, annual revenue has fallen nearly $500 million over the past five years despite more than $20 billion invested in content, platform and hardware.

The company said it is pursuing a new hardware business model and partnerships while remaining committed to its Helix console platform.