Xbox shelved Keystone streaming stick because it would've been too expensive

Xbox boss Phil Spencer explained the company was struggling to build the right product at the right price.

Xbox boss Phil Spencer has shed more light on why the company hasn't released its "Keystone" streaming stick (yet).

Microsoft confirmed the existence of the codenamed device in May this year (before it made an appearance on Phil Spencer's famous shelf), but also said it decided to "pivot away from the current iteration" of Keystone to refocus its efforts on a new approach.

Now, speaking on The Verge's Decoder podcast (via VGC), Phil Spencer explained Keystone was working well – indeed, some employees had even taken the device home for a test run – but that ultimately it was far too costly to produce.

"Keystone was more expensive than we wanted it to be when we actually built it out with the hardware that we had inside, and we decided to focus that team’s efforts on delivering the smart TV streaming app," said Spencer.

The long-serving Xbox chief said the company is still focused on Keystone and hopes to eventually make the hardware more cost-effective. The bottom line, however, is that Microsoft is currently selling the Xbox Series S for $299, so the streaming stick would need to be able to compete with that in a meaningful way.

"I think in order for a streaming-only box to make sense, the price delta to [the Series] S has to be pretty significant," continued Spencer. "I want to be able to include a controller in it when we go do that. So, it was really just about if we could build the right product at the right price, or if we can’t, how can we focus the team’s effort? And we decided to go do the TV app with Samsung and we’re really happy with the results there."

In terms of what Spencer considers to be a viable price point for Keystone, he indicated that somewhere between $99 and $129 would make sense. Ultimately, the iteration of Keystone we've glimpsed was unable to hit that mark.

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