Xbox CEO Announces Strategic Overhaul to Improve Sales

Microsoft Xbox CEO Asha Sharma told employees in a statement on 5 May that she plans to appoint new company leaders from Microsoft’s CoreAI group and cancel development of Copilot on the Xbox platform.

These moves are part of Asha’s overhaul strategy to reinvigorate growth for the Xbox brand amid a period of declining sales.

“We need to evolve how we work and how we are organized across our platform,” Asha says in the memo. 

“Right now, it is too hard to ship impact quickly. We spend too much time inward instead of with the community, and we lack the depth we need in some of the fundamentals.”

In a company statement released on 30 April, CEO Satya Nadella acknowledged the company’s fourth gaming revenue decline in the past six quarters. He discussed plans to win over fans of Xbox, Bing, Edge and other consumer assets.

Speaking about recent improvements to Windows’s performance and realigning focuses on core features and fundamentals for its customer base, Satya says these changes can also be seen in the Xbox brand, where the team is “recommitting to our core fans and players, and shaping the future of play”.

Changing leaders for a new perspective

Asha was appointed as CEO in February 2026 after serving as Microsoft’s President of CoreAI Product for two years prior.

She was appointed soon after a January 2026 report that revealed a 9% year-over-year decline in total gaming revenue and a considerable 32% drop in Xbox hardware sales.

Asha replaced the outgoing CEO Phil Spencer, who retired after 38 years at Microsoft and 4 years as CEO of Microsoft Gaming.
 
Prior to her time at Xbox, Asha led several leadership roles at companies like Meta and Instacart and served as President of Product for Microsoft’s CoreAI engineering group in 2024 – the team that works on GitHub Copilot, Visual Studio Code and other developer tools.

In her memo to employees, Asha says that Xbox is “bringing in new leaders with consumer and technical expertise we do not yet have”. 

Her decision on those leaders is informed by her time at CoreAI, where four employees of the AI branch will join Asha and help drive her new direction for the Xbox brand.

The new leaders are:

• Jared Palmer, who has acted as CoreAI Vice President and will join Xbox to work on product, engineering, developer tools and infrastructure
• Tim Allen, CoreAI’s Vice President of design, who will go on to lead the same field under the Xbox name
• Jonathan Mckay will serve as Xbox’s Head of Growth, a title he previously held during his time at OpenAI
• Evan Chaki, previously a General Manager at CoreAI, will now run a team of engineers to streamline development
• David Schloss, Instacart’s Senior Director of product and growth, will take charge of Xbox’s subscription and cloud business

Realigning market position

Asha said in an X post on 5 May that Xbox will “address friction for both players and developers,” by implementing additional changes such as its plans to scrap plans to bring the company’s AI Copilot to console, while reducing its functionality on mobile.

“Today, we promoted leaders who helped build Xbox, while also bringing in new voices to help push us forward. This balance is important as we get the business back on track,” she said.

“As part of this shift, you’ll see us begin to retire features that don’t align with where we’re headed. We will begin winding down Copilot on mobile and will stop development of Copilot on console.”

Since Asha’s appointment, Xbox has released a flurry of announcements in an attempt to improve the brand’s place in the gaming market, including confirmation of its next console – currently named Project Helix – and a reduction in price for Xbox Game Pass.

In a February blog post on Microsoft, Asha discusses how despite the brand’s discontinuation of Copilot development, the brand is not ruling out using AI to improve its operations and future strategies.

“As monetization and AI evolve and influence this future, we will not chase short-term efficiency or flood our ecosystem with soulless AI slop,” she said.

“Games are and always will be art, crafted by humans and created with the most innovative technology provided by us.”