End of an era: Xbox's CEO Phil Spencer is officially retiring next week

Xbox's Phil Spencer and Sarah Bond talk business — (Image credit: Xbox)

Long-time Xbox head Phil Spencer is officially retiring. IGN first reported the news, but now Xbox and Spencer himself have released statements making this a done deal. President Sarah Bond has also allegedly resigned, though that is still unofficial at time of reporting.

Spencer has been at Microsoft for over 38 years, and steps down just as Xbox is about to hit its 25th anniversary. Spencer has been with the Xbox division since the launch of the original console in 2001, becoming head of Xbox in 2014 after the poor release of the Xbox One.

It’s rare in life to know when a chapter is closing, but after 38 years at Microsoft, that moment has arrived for me. I’ve made the decision to retire and begin the next chapter of my life. It’s a milestone that’s given me a chance to reflect on the incredible journey I’ve been…February 20, 2026

"Over 38 years at Microsoft, including 12 years leading Gaming, Phil helped transform what we do and how we do it," Microsoft CEO Satya Nadella said in an email to staff.

Current President of Microsoft's CoreAI product, Asha Sharma, will replace Spencer as CEO. Sharma has been at Microsoft since 2024, after stints at Meta and Instacart. In her own email, she made commitments to continuing the Xbox legacy and improving upon it in a "period of rapid change."

Notably, she continued the recent chorus from Xbox about the future of consoles. A new console may be coming, but Xbox looks to be going for more of an overall branding exercise than just the console.

"Gaming now lives across devices, not within the limits of any single piece of hardware," Sharma wrote. As we expand across PC, mobile, and cloud, Xbox should feel seamless, instant, and worthy of the communities we serve. We will break down barriers so developers can build once and reach players everywhere without compromise."

Welcome to Team Xbox, we're excited about what we'll build together! 🎮 https://t.co/6jQ4tD5lrrFebruary 20, 2026

Despite coming from AI, Sharma also said that they will not "flood our ecosystem with soulless AI slop." She added that games are art made by humans. An interesting response as the company deals with Copilot AI bugs and its alleged commitment to stop stuffing Windows 11 with AI.

Just a few weeks ago, Nadella was praising Microsoft's investments in AI during the company's most recent earnings call. Meanwhile, Xbox revenue decreased again.

There was no letter from Sarah Bond, who, according to the Spencer email, decided to leave Microsoft.

What's next for Xbox?

Person holding a black Xbox controller — (Image credit: Emanuele Cremaschi / Getty Images)

We're in a strange time for Xbox. AMD just hinted that the next-generation Xbox could launch in 2027, though allegedly, Microsoft was taken aback by that suggestion.

Recent rumors have suggested that an Xbox/PC hybrid is in the works and could be revealed later this year.

With the arrival of the Asus ROG Xbox Ally handheld PC gaming consoles last fall, the "Xbox Play Anywhere" branding took its first steps into reality, and as Sharma suggested, that is the future of Xbox. Xbox is becoming software as a service rather than hardware.

It's unclear how this executive shakeup will or will not alter upcoming Xbox plans. New COO Matt Booty said in his letter that no other staffing or structural changes would take place with this transition.

Meanwhile, Xbox had a disastrous holiday season, reflected in the earnings report, and gamers have not been happy with multiple price hikes across the consoles, Game Pass, and games themselves.

Xbox is on shaky ground right now, and maybe a fresh face or two will see it stabilize.

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Scott Younker is the West Coast Reporter at Tom’s Guide. He covers all the lastest tech news. He’s been involved in tech since 2011 at various outlets and is on an ongoing hunt to build the easiest to use home media system. When not writing about the latest devices, you are more than welcome to discuss board games or disc golf with him. He also handles all the Connections coverage on Tom's Guide and has been playing the addictive NYT game since it released.

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