(Business Perspective) Does MS really need Xbox Hardware?

[Machiavellian]

Here is one of the biggest problems with thinking that Cloud gaming is the solution for parents who cannot afford a console. First in order to do Cloud gaming for those same parents, they will need to pay for the higher tier for their internet connection. Just so you know most plans especially in the US are way north of 100 dollars a month. Now if you are already strapped for cash, you already sub to other subscription services and now you have to pay for more expensive internet just to get a so so experience from your games, yeah, thats not going to happen.

Second, Azz, you state that MS will not have to do RD for their next console but what exactly will be powering those servers for XCloud. Currently MS is using Series X consoles to power those servers, what will MS use in the future or do you believe that the Series X will be powering those servers forever. I do not believe you understand how XCloud works or even how PS Now works. They both use their existing hardware to power those servers, why, because of compatibility. Developers need target hardware to code for. In order to support backwards compatibility it needs to be hardware made by the vendor or you lose compatibility and a whole host of games. Even if MS exit the hardware business they would still need to develop hardware that is compatible with the Series X to maintain compatibility which means they will still need to spend the RD money anyway.

Now you might believe that MS could just use off the shelf parts but that is not cost efficient because they could have done that anyway. There is a reason they are not using a PC board with an AMD card to power those servers. The reason is cost. MS create their use AMD to create their hardware AOC chip but then they have another company manufacture everything themselves compared with purchasing it from AMD at a substantial cost compared to them owning and having it manufactured themselves. Your whole premise is that MS will save money by not having to do any hardware manufacture for the next console but in reality, even for XCloud, MS still must create new hardware because that is what powers XCloud.