Microsoft is making major changes inside its Xbox gaming division as new Xbox CEO Asha Sharma reshapes leadership, drops unpopular projects, and pushes the company to move faster amid declining console sales.
Quick Summary – TLDR:
- Microsoft Xbox is undergoing a major internal restructuring under new CEO Asha Sharma.
- Xbox is shutting down its Copilot gaming assistant on mobile and stopping console development.
- Several executives from Microsoft’s CoreAI division are joining Xbox leadership roles.
- The changes come as Xbox faces declining gaming revenue and pressure from competitors like Nintendo and Sony.
What Happened?
Microsoft has started a large scale overhaul of its Xbox business following the appointment of Asha Sharma as the new head of Xbox earlier this year. Sharma, who replaced longtime Xbox chief Phil Spencer, is reorganizing leadership, bringing in new executives from Microsoft’s CoreAI division, and retiring projects that no longer fit Xbox’s direction.
One of the biggest announcements is the shutdown of Xbox’s Copilot initiative, an AI-powered gaming assistant that was designed to help players during games like Minecraft. Sharma confirmed that Copilot on mobile is being wound down while console development for the feature has officially stopped.
Xbox needs to move faster, deepen our connection with the community, and address friction for both players and developers.
— Asha (@asha_shar) May 5, 2026
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…
Xbox Pushes for Faster Execution
In messages shared with employees and on social media, Sharma admitted Xbox has been too slow in shipping meaningful updates and responding to community feedback.
“We need to evolve how we work and how we are organized across our platform,” Sharma wrote in a company memo.
She also said Xbox needs to “move faster, deepen our connection with the community, and address friction for both players and developers.”
The comments reflect growing pressure on Xbox after Microsoft reported its fourth gaming revenue decline in the last six quarters. Recent hardware sales also show Xbox consoles trailing behind both Sony’s PlayStation 5 and Nintendo’s Switch systems.
Sharma appears focused on rebuilding Xbox around faster development cycles, stronger infrastructure, and improved platform services.
Copilot No Longer Fits Xbox Strategy
One of Sharma’s first major decisions was ending Xbox Copilot, a feature that Microsoft previously promoted as an AI gaming assistant. The tool aimed to provide real time gameplay tips and support for players.
However, Sharma said the initiative no longer aligns with Xbox’s current direction.
While the Copilot shutdown may look like Microsoft is stepping back from AI in gaming, that does not appear to be the case. Instead, the company seems to be shifting resources toward backend systems, developer tools, analytics, and platform improvements rather than consumer facing AI experiments.
Sharma also hinted that other features or projects that no longer align with Xbox’s goals could be retired in the future.
CoreAI Leaders Move Into Xbox
A major part of the restructuring involves bringing experienced leaders from Microsoft’s CoreAI organization into Xbox.
Among the biggest appointments:
- Jared Palmer joins Xbox as VP of engineering and technical adviser focused on infrastructure and developer tooling.
- Tim Allen will lead Xbox design by combining product design, creative teams, and research under one structure.
- Jonathan McKay becomes head of growth, data platform, and analytics.
- Evan Chaki will lead a new engineering group focused on simplifying development and reducing repetitive work.
- David Schloss will oversee Xbox subscription and cloud business operations.
Many of these executives previously worked closely with Sharma in Microsoft’s AI and developer focused divisions, suggesting Xbox is becoming more technically focused under her leadership.
At the same time, longtime Xbox executives are stepping away. Kevin Gammill is leaving his position, while Roanne Sones will take a leave of absence before transitioning into an advisory role later.
Xbox Looks Ahead to New Hardware
Alongside internal restructuring, Sharma has already made several changes to Xbox’s broader strategy. Microsoft recently adjusted Game Pass pricing, ended its “This is an Xbox” campaign, and started teasing next generation Xbox hardware known internally as Project Helix.
Sharma previously said the upcoming hardware would “lead in performance,” though Microsoft has not revealed launch details yet.
The company now appears focused on modernizing Xbox from both a technical and business perspective as it tries to recover momentum in the gaming market.
SQ Magazine Takeaway
I think Microsoft clearly realized Xbox could not continue operating the same way while competitors kept moving faster. Asha Sharma’s strategy feels very different from the previous Xbox era. Instead of chasing flashy AI features like Copilot, the company now seems more focused on fixing the core platform, improving development speed, and rebuilding trust with players.
Bringing in leaders from CoreAI also signals that Microsoft wants Xbox to operate more like a modern software platform instead of just a console business. The real challenge now is whether these changes can actually help Xbox regain relevance against PlayStation and Nintendo in the next few years.
