Microsoft raises AI‑related product prices amid industry pricing pressure

Microsoft announced global price increases for its Xbox consoles beginning 1 August, citing a sharp rise in hardware costs caused by AI‑driven chip shortages. The Series S price will rise to $500 and the Series X could reach $800, while a 2 TB model is being discontinued. At the same time, Italy's antitrust authority opened an investigation into Microsoft 365 subscription hikes, alleging that AI features such as Designer and Copilot were added without clear notice, possibly constituting aggressive trade practice.

Industry analysts warn that the era of high AI pricing may be ending. They point to diminishing performance gains, the emergence of open‑source models priced at a fraction of proprietary offerings, specialized AI chips that lower inference costs, zero switching costs for developers, and the prospect of consumer‑grade local models that could replace cloud‑based subscription fees within five years.