The good news: the Xbox handhelds are here! The bad news: Xbox console sales are experiencing a significant slide.

Microsoft reports Xbox console sales were down 29 percent (in revenue) in the summer quarter, which was sandwiched between price hikes in May and October. Fortunately, Xbox content and services revenue ($5.5 billion for the quarter) did not follow suit that line item actually grew by one percent from July to September 2025. All told, gaming revenue decreased $113 million, or by two percent.

Xbox sales figures dropped 22 percent in the prior quarter. In other words, the increased prices are not offsetting the decrease in units moved. The handheld Xbox ROG Ally ($599.99) and Xbox ROG Ally X ($999.99) were released on Oct. 16 initial sales figures will be captured in the current quarter. The devices are actually manufactured by ASUS; Xbox partnered with the handhelds company on the console-friendly portable PCs.

Thankfully, Xbox is a pretty minor part of Microsofts overall business. A zoomed-out view shows the companys quarterly revenue of nearly $78 billion (up 18 percent), operating income of $38 billion (up 24 percent) and net income nearing $28 billion (up 12 percent) on a GAAP basis and almost $31 billion (up 22 percent) on a non-GAAP basis. Earnings per share was $3.72 (GAAP, up 13 percent) and $4.13 (non-GAAP, up 23 percent).

Our planet-scale cloud and AI factory, together with Copilots across high value domains, is driving broad diffusion and real-world impact, said Satya Nadella, chairman and chief executive officer of Microsoft. Its why we continue to increase our investments in AI across both capital and talent to meet the massive opportunity ahead.

We delivered a strong start to the fiscal year, exceeding expectations across revenue, operating income, and earnings per share, said Amy Hood, executive vice president and chief financial officer of Microsoft. Continued strength in the Microsoft Cloud reflects the growing customer demand for our differentiated platform.