Xbox Chief Phil Spencer’s Departure: What’s Next for Microsoft?

Xbox chief Phil Spencer is bidding farewell to Microsoft after an impressive tenure of almost 40 years at the renowned software giant. Alongside Spencer, Xbox president Sarah Bond is also parting ways with Microsoft in a significant management shake-up affecting both Xbox and Microsoft’s gaming initiatives. The reins of Microsoft Gaming will now be in the capable hands of Asha Sharma, the current president of CoreAI product.

The news of Phil Spencer’s retirement was officially communicated by Microsoft CEO Satya Nadella in a memo addressed to all Microsoft employees. Nadella expressed gratitude for Spencer’s exceptional leadership and collaboration during his remarkable 38-year journey at Microsoft, which included 12 years at the helm of the Gaming division. Spencer’s contributions were instrumental in revolutionizing the company’s operations.

Taking over from Phil Spencer as the new CEO of Microsoft Gaming, Asha Sharma brings a wealth of experience, currently serving as the president of CoreAI product at Microsoft. Her involvement in Microsoft’s AI platform endeavors since her return to the company in 2024 makes her a fitting choice for this pivotal role. Spencer, on the other hand, will continue to offer advisory support during the transition period.

Despite not being an avid gamer like Spencer, Sharma’s consumer-focused background positions her well to lead a division as expansive as Microsoft Gaming. Her previous roles at Meta as VP of product and engineering, and later as chief operating officer at Instacart, demonstrate her proficiency in managing large-scale operations, aligning business models, and fostering global growth.

Satya Nadella emphasized his confidence in the future of gaming within Microsoft, highlighting Sharma’s capabilities in platform development, business model alignment, and global scalability. These attributes are deemed essential for steering Microsoft’s gaming business towards its next phase of growth.

Sharma has outlined three key commitments for the future of gaming at Microsoft: delivering exceptional games, revitalizing Xbox, and shaping the future of gaming experience. Her vision includes a renewed focus on core Xbox fans, developers, and the console itself, acknowledging their integral role in shaping the gaming ecosystem.

In a personal memo to Xbox employees, Phil Spencer revealed his decision to retire from Microsoft in the fall of 2025, following months of speculation about his potential retirement. Despite previous assurances from Microsoft in July that Spencer had no immediate retirement plans, the announcement came as a surprise to many.

Reflecting on his journey, Spencer expressed gratitude for the opportunity to contribute to Microsoft’s evolution since joining as an intern in 1988. His pivotal roles in product development, including Encarta, Microsoft Money, and Microsoft Works, eventually led him to lead the Xbox division in 2014, overseeing significant milestones such as the launch of Xbox Series X / S and the expansion of Xbox Game Pass.

Notable for his involvement in Microsoft’s strategic gaming acquisitions, including the likes of Minecraft maker Mojang, Activision Blizzard, and ZeniMax Media, Spencer’s impact on the gaming industry has been profound. His departure marks the end of an era at Microsoft Gaming.

Spencer’s journey at Microsoft, marked by his unwavering dedication to the company and its community of players, creators, and teams, has been nothing short of extraordinary. As he embarks on a new chapter in his life, he leaves behind a lasting legacy and a profound impact on the gaming landscape.