New Multi-Year Xbox & AMD Deal for Future Consoles

Microsoft's Xbox division and Advanced Micro Devices (AMD) announced a multi-year hardware partnership that will see the companies co-engineer the next generation of gaming console hardware, with plans to introduce improved graphics, artificial intelligence features, and enhanced backwards compatibility.

The partnership represents a continuation of AMD's role as a key supplier to major console manufacturers and comes as Microsoft seeks to strengthen its position in the competitive gaming hardware market where it trails Sony Corp's PlayStation division.

Microsoft revealed that its next generation of consoles will feature deeper Windows integration and expanded cross-platform gameplay capabilities. The company is also working to bring third-party digital storefronts including Steam, Epic Games Store, and GOG to the Xbox ecosystem in future console generations.

"We've been really innovating for a long time in the console space, and as we partner across the industry it's really about how do we bring those innovations that we've incubated and developed in the console space and bring them to PC and bring them to the handheld gaming space," said Jason Ronald, Microsoft's vice president of Next Generation, in an interview with technology publication The Verge.

Ronald indicated that the next generation of Xbox consoles would be designed to function more like a personal computer than a traditional home console, marking a potential shift in Microsoft's hardware strategy.

The announcement follows reports from gaming publication IGN that Microsoft is targeting a 2027 release window for its next-generation Xbox consoles. The company is also reportedly developing a handheld gaming device slated for release by the end of 2025.

AMD has extensive experience partnering with console manufacturers. The company currently produces AMD Zen 2 chips for both Sony's PlayStation 5 and Microsoft's Xbox Series S and Series X console lineup. AMD also provided its Jaguar chip architecture for the previous console generation, including the PlayStation 4, PlayStation 4 Pro, Xbox One, Xbox One S, and Xbox One X.

The partnership comes as Microsoft faces significant challenges in the console market. Sony's PlayStation 5 has sold over 77.7 million units according to the company's sales reports, while Microsoft has sold approximately 28.3 million Xbox Series S and Series X consoles combined through September 2024, according to IGN estimates.

Earlier this year, Microsoft announced collaborations on handheld gaming devices, including partnerships that bring Xbox features to portable gaming systems running Windows 11. Xbox chief vice president Roanne Sones said the company aimed to "create an authentic Xbox experience in a handheld form factor."

The hardware partnership with AMD reflects Microsoft's broader strategy to expand Xbox beyond traditional console boundaries and compete more effectively with Sony while also positioning itself in the growing handheld gaming market. The collaboration is expected to leverage AMD's semiconductor expertise and Microsoft's software and gaming ecosystem capabilities.