Phil Spencer joined Microsoft as an intern in 1988, back when the company was still figuring out Windows. Nineteen years old, and on Friday he announced his retirement, effective Monday.
He spent nearly four decades at Microsoft. The math feels wrong until you remember Xbox didn't exist until 2001, and Spencer has been synonymous with it since launch. He ran the gaming division for 12 of those years, the span during which Xbox stopped being a distant third-place console and became a multi-platform subscription business. Circana projected last week that U.S. gaming spending will hit a record 62.8 billion in 2026. Spencer won't be there to witness it. He told Satya Nadella last fall he wanted out. The public story is an "epic ride" that had to end sometime.
The interesting story is who's replacing him. Sarah Bond was supposed to be next. She was Xbox president, architect of the multi-format strategy, the executive who actually built Game Pass into something that matters. The obvious heir. Then Bond resigned, and the announcement didn't explain why. Microsoft appointed Asha Sharma, who joined the company in 2024 to run CoreAI after serving as COO of Instacart and a VP of product at Meta. She has no gaming background. She reports answers to Nadella.
Then came the memo. "My first job is simple: understand what makes this work and protect it," Sharma wrote to staff. "Everything begins here—great games." She rejected "short-term efficiency or flood[ing] our ecosystem with soulless AI slop." She promised to protect human-crafted experiences and console hardware and core fans. Her language is careful and her messaging deliberate. It's also weird. Microsoft hired an AI executive to run Xbox and her first act was to promise she won't do the thing AI executives usually do. Maybe that's the point. Maybe it's damage control. Either way the timing is brutal. Microsoft Gaming is still absorbing Activision Blizzard and recovering from layoffs. The company is also figuring out what a multi-platform future looks like when Roblox, one company, drove 67% of non-China industry growth last year. Matthew Ball flagged that number for a reason. The competition isn't Sony anymore. It's platforms that didn't exist when Spencer started.
Matt Booty got promoted to chief content officer. He's run Xbox Game Studios for years. A signal, perhaps. The creative side stays in experienced hands. But the strategist side now belongs to someone who spent the last decade optimizing grocery delivery and social feeds. Spencer pushed backward compatibility and cross-play through. He built Game Pass into a service that pulled Xbox back from irrelevance. Whether Sharma extends that legacy or pivots away from it remains unclear.
Microsoft insists nothing has changed. Multi-platform policy stays, as do Game Pass and next-gen console plans Bond teased before she left. The company line is continuity. Maybe it's true. Maybe they're buying time. Spencer stays on as an advisor through the summer. Then he's gone. The next Xbox era starts in three days.
