Phil Spencer retiring from Xbox after 25 years, to be replaced by Microsoft AI executive

Microsoft announced a major leadership shakeup at Xbox. Microsoft Gaming CEO Phil Spencer is retiring, and Xbox president Sarah Bond is also leaving the company. Asha Sharma, formerly president of Microsoft's CoreAI division, has been named the new CEO of Microsoft Gaming.

In an email to Microsoft employees, Sharma outlined her priorities:

We will recommit to our core Xbox fans and players, those who have invested with us for the past 25 years, and to the developers who build the expansive universes and experiences that are embraced by players across the world.

Matt Booty, formerly head of Xbox Game Studios, will serve as Xbox chief content officer under Sharma.

Spencer joined Microsoft in 1988 as an intern and has been with Xbox since its launch in 2001, serving as CEO of Microsoft Gaming since 2022. He revealed in an email to staff that he first approached Microsoft CEO Satya Nadella about stepping down last fall, with both aiming to make the transition as smooth and deliberate as possible.

The retirement officially takes effect Monday, February 23.

Bond, who is also departing, had been a prominent face for Xbox in recent years – promoting the platform in the context of devices like the Asus ROG Ally and the upcoming PC-like successor to the Xbox Series X and S.

Sharma's appointment – coming straight from Microsoft's AI division – caught the industry off guard and offers a clear signal of the broader direction Microsoft is heading.