Microsoft (MS) has pushed back against widespread rumors that it plans to abandon its Xbox console business and pivot solely toward software development. The company’s statement comes amid growing concern among fans following signs such as reports of paused hardware development and reduced retail presence.

Talk of a potential Xbox withdrawal first surfaced when insiders claimed that progress on Microsoft’s next-generation Xbox—originally expected in 2026—had stalled. Speculation intensified when major retailer Costco reportedly halted Xbox sales and other large chains began clearing out existing inventory at steep discounts.

Industry analysts suggested that Microsoft might shift focus toward high-margin blockbuster games, reframe Game Pass as a cloud gaming entry point via xCloud, and bring more Xbox titles to rival consoles and platforms. Many viewed this as a response to internal doubts about the performance of “Call of Duty on Game Pass,” which allegedly fell short of expectations.

Microsoft moved to quash the rumors, saying it is making significant investments in developing its next-generation console. Executives emphasized that while the upcoming Xbox hardware could resemble a PC more closely than before, it would remain a dedicated gaming console at its core.

The company also confirmed that it has entered a multi-year partnership with AMD to enhance its next-generation hardware. Through this collaboration, Microsoft aims to deliver major improvements in AI-assisted graphics performance.

International outlets echoed that Microsoft is unlikely to abandon the hardware side of its business, noting that Xbox continues to generate substantial revenue. Given the company’s roughly 30% commission on all transactions within the Xbox ecosystem, analysts believe it would make little sense for Microsoft to walk away from that income stream.

This article was translated from the original that appeared on INVEN.