A new report from reveals that Microsoft's gaming division and Xbox are going through a . Phil Spencer will retire this coming Monday, February 23, 2026 , after first joining Microsoft all the way back in 1988 as an intern. He's not the only one departing: Sarah Bond , current president of Xbox at Microsoft, is now the former president of Xbox at Microsoft, as she will resign from her role. Lastly, Microsoft's current president of its CoreAI division, Asha Sharma , will take Spencer's place as the new chief executive officer of Microsoft Gaming.

Back in July 2025, we reported on a rumour that Phil Spencer would retire with the arrival of the next-generation Xbox console. That rumour was denied by Microsoft at the time, claiming that Spencer was not going to retire " anytime soon ." At the same time, we still pointed out that Spencer was 57 at the time of the report, and that he had been with Microsoft for nearly 40 years. To say Spencer was due to retire soon was not the most prescient call to make at the time, and it seems that was indeed the case.

" I want to thank Phil for his extraordinary leadership and partnership, " said Microsoft's chief executive officer, Satya Nadella . " Over 38 years at Microsoft, including 12 years leading Gaming, Phil helped transform what we do and how we do it. "

Spencer, for his part, added that, " Last fall, I shared with Satya that I was thinking about stepping back and starting the next chapter of my life. From that moment, we aligned on approaching this transition with intention, ensuring stability, and strengthening the foundation we've built. Xbox has always been more than a business. It's a vibrant community of players, creators, and teams who care deeply about what we build and how we build it. And it deserves a thoughtful, deliberate plan for the road ahead ."

" Today marks an exciting new chapter for Microsoft Gaming as Asha Sharma steps into the role of CEO, and I want to be the first to welcome her to this incredible team. Working with her over the past several months has given me tremendous confidence. She brings genuine curiosity, clarity and a deep commitment to understanding players, creators, and the decisions that shape our future. We know this is an important moment for our fans, partners, and team, and we're committed to getting it right. I'll remain in an advisory role through the summer to support a smooth handoff. "

Also part of this shake-up is Matt Booty , who will take over from Asha Sharma as the new chief executive officer of CoreAI at Microsoft. " Looking forward, I'm excited to partner with Asha as our next CEO, " said Booty. " Our first conversations centred on her commitment to making great games and the role that plays in our overall success ."

Sharma, for her part, began her address to Microsoft's gaming staff by saying she feels " two things at once: humility and urgency ."

" Humility because this team has built something extraordinary over decades. Urgency because gaming is in a period of rapid change, and we need to move with clarity and conviction. I am stepping into work shaped by generations of artists, engineers, designers, writers, musicians, operators and more who create worlds that have brought joy and deep personal meaning to hundreds of millions of players. The level of craft here is exceptional, and it is amplified by Xbox, which was founded in the belief that the power of games connect people and push the industry forward. Thank you to Phil for his leadership, and to every studio, platform, and operations team that built this foundation. We are stewards of some of the most loved stories and characters in entertainment and bring players and creators together around the fun and community of gaming in entirely new ways. "

Sharma added that her first job is to " understand what makes this work and protect it ," which doesn't exactly inspire a whole lot of confidence, and speaks to her lack of experience within the video game industry. Before she joined Microsoft in 2024, she was a vice president of product and engineering at Meta .

That said, her next statement was that her understanding begins with three commitments, the first of which is: " great games ."

" Everything begins here, " she adds. " We must have great games beloved by players before we do anything. " It's exactly what players want to hear, and is exactly the opposite of what players once heard from Spencer in a now-infamous quote.

Sharma continues to say her second commitment is " the return of Xbox ," and that the company will " recommit to our core Xbox fans and players, those players 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 ."

This may sound like Xbox could pivot away from its current trajectory of centring its services over its hardware, but with how far along that plan is, it feels unlikely for the next Xbox console to usher in the platform's return to households.

Lastly, her third commitment is " future of play ," which, unsurprisingly, is where Sharma mentions how AI and monetization are continuing to evolve, but she does claim that " we will not chase short-term efficiency or flood our ecosystem with soulless AI slop ." Strong words that players will be sure to remember, and remind Sharma of, if we ever see something from Microsoft stray from that commitment.

Ultimately, this is the end of an era for Xbox. There's a lot that players will remember Spencer and Bond for, not all of it positive, and we're entering a new chapter for the Xbox platform and Microsoft's time in the video game industry.

Interestingly, the only one we haven't heard from yet is Sarah Bond, who does not have a statement included in the report, nor has she made a statement on her social media accounts.

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