Fairgoers play at the Xbox booth at the Cologne Trade Fair Center during the opening day of Gamescom 2025 on August 20, 2025 in Cologne, Germany.
Ying Tang | Nurfoto | Getty Images
Microsoft The company said Wednesday it will send prototypes of its next-generation Xbox console to video game developers in 2027 as it tries to close the gap with Nintendo and Sony.
The hardware consists of a custom chip Advanced Micro DevicesJason Ronald, vice president of Microsoft’s Xbox division, said in a blog post.
“It delivers an order of magnitude leap in ray tracing performance and capability, integrates intelligence directly into the graphics and compute pipeline, and delivers meaningful gains in efficiency, scale, and visual ambition,” Ronald wrote. “The result is a more realistic, immersive and dynamic world for players.”
Microsoft’s announcement comes weeks after the company said longtime gaming chief Phil Spencer is retiring and will be replaced by artificial intelligence executive Asha Sharma. In a message to employees, Sharma said the company will make a renewed commitment to Xbox, starting with console gaming.
Just 7% of Microsoft’s revenue came from gaming in the December quarter, with Xbox hardware revenue down 32%. The company took an unspecified impairment charge on its gaming business during the quarter.
According to estimates by video game website VGChartz, Xbox consoles have outsold alternatives from Nintendo and Sony since the flagship Xbox Series X and more affordable Series S came out in 2020. In the fall, Asus released handheld Xbox-branded devices.
The Xbox Series S and X, originally released in 2020, also feature AMD processors.
“I’m excited to share that we plan to ship alpha versions of the hardware to developers starting in 2027,” Ronald wrote.
Microsoft is reportedly pushing its video game unit to reach a 30% profit margin. Last year, the business laid off some employees and canceled titles in development.
Sharma mentioned the next-generation console, internally called Project Helix, at XPost last week.
“Project Helix drives performance and plays your Xbox and PC games,” he wrote.
Watch: Microsoft Gaming CEO and Xbox President Phil Spencer will join Microsoft effective immediately
