Microsoft isn't making money on the Xbox One X but it's not complaining

The home console market is undergoing some interesting shifts at the high and low ends of the market. At the high end, companies are feeling the squeeze for consumers’ entertainment time thanks to how much time is now spent on mobile devices and other technologies. At the low end, companies are capitalizing on nostalgia with great success.

One of the more interesting tidbits to be revealed about the console market recently is that Microsoft does not expect to make a profit from the recently announced Xbox One X. The updated 4K console will sell for $500, which is $100 more than the Sony PlayStation Pro 4. While this is irksome to fans, Xbox head Phil Spencer told Business Insider that the company isn't making money on the new console, at least not “in aggregate." The hardware "is not the money-making part of the business," he said. Companies make money selling games.

For this kind of gaming experience, Microsoft and Sony are the only two companies in the business. This business model might have been inevitable, though, as keeping costs down is essential to capturing a larger base of consumers increasingly satisfied with what they get from the smartphones or PCs they already own.

That’s not to say money can't be made building cheaper consoles. Nintendo and Sega have both re-released old systems with success. Nintendo released the NES Classic, a rehash of its original 1985 system. The company AtGames offers the Sega Classic Game Console preloaded with 80 classic Sega games.

AtGames also licenses content from Atari to make the Atari Flashback. Atari might be looking to offer something more unique in the future, though. The company is teasing a new console called the Atari Box. Atari today is a shadow of its former self, but it might be looking to re-emerge as a brand that offers something more than nostalgia. If it does that, it will probably be looking for a unique niche in the market. There doesn’t appear to be much room at the top nor much money, according to Microsoft.