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only777 said:

I can't see how that matters.

You can both right now, but instead most people are choosing neither.

For the few that do, they can buy them for as around £150-£200 on the 2nd hand ebay market:

https://www.ebay.co.uk/sch/i.html?_nkw=xbox+series+s&_sacat=0&_from=R40&rt=nc&LH_Sold=1&LH_Complete=1

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So if Microsoft can't sell a cheap console and they can't sell a normal priced console.  I can't see why they would choose either of these paths again.  Surely the premium console market (even though it's small) would be the only place left to go.

The reason why no one is buying an Xbox Series S is because the Series X exists.

The reason why people arent buying the Series X is because the games are being released day 1 on Steam.

If they had one SKU that wasnt as weak as the Series S or as strong as the Series X but in between and that was not as powerful as the competitors but powerful enough to be able to run the games at a decent performance/visual resolution without it being too expensive (i.e. a $400 SKU instead of it being a $300 or a $500), they would absolutely do a lot better than a premium priced Xbox which more than likely would be ignored considering you would likely be able to get a mid range desktop that would be more bang for your buck than a standalone console.

They are already bleeding money with what they are going through, making another high premium console would make things worse since it looks like they are pushing into becoming more of a service than a console maker (like Steam for an example).