Xbox CEO Asha Sharma is overhauling the gaming division's leadership by pulling four executives from Microsoft's CoreAI engineering group, her former team, as console sales fall 33% year-over-year and gaming revenue drops for the fourth time in six quarters.
In a memo viewed by CNBC, Sharma told employees the unit needs to "evolve how we work and how we are organized across our platform." She said it's "too hard to ship impact quickly" and that Xbox spends "too much time inward instead of with the community." The restructuring brings in Jared Palmer as VP of engineering and technical advisor to Sharma, Tim Allen to lead design, Jonathan McKay as head of growth, and Evan Chaki to run a forward-deployed engineering team. David Schloss, a former Instacart growth executive, will take over Xbox's subscription and cloud business.
Palmer will work "directly with me on our most complex product and engineering problems, with a focus on developer tooling, taste, and infrastructure," Sharma wrote in the memo seen by The Verge. Allen's appointment marks the "first time bringing together product design, design engineering, research, and creative with a fan-first focus," she added.
Two veteran leaders are exiting. Kevin Gammill, corporate VP of Xbox user experience, is leaving after more than 15 years at the company.
Roanne Sones, corporate VP of Xbox devices and ecosystem, will take a leave of absence after this summer and remain as an advisor. Sources told Windows Central that Sones had been planning to step down before Sharma joined Xbox. The leadership changes arrive as Xbox faces its steepest hardware decline in years. Gaming revenue dropped 7% in the quarter ending March 31, content and services fell 5%, and hardware revenue plunged 33%.
Microsoft reported its fourth gaming revenue decline in the past six quarters. The Nintendo Switch, Switch 2, and PlayStation 5 all outsold Xbox Series X and S in the first quarter, according to VGChartz.
Sharma, who took over in February after Phil Spencer retired, came to Microsoft in 2024 from Meta and Instacart. She served as president of product in CoreAI, the group behind GitHub Copilot and Visual Studio Code, before moving to Xbox. The hires she's pulling from that team are "bringing in new leaders with consumer and technical expertise we do not yet have," she wrote.
"This is an important time for Xbox," Sharma told staffers. "Our goal with this change is simple: build a platform that is affordable, personal, and open by staying close to the work and the people we serve."
Xbox's next-generation console, Project Helix, is in development under Jason Ronald, who received a promotion as part of the shakeup. The device will play PC and console games and is expected to carry a premium price. But Microsoft forecast further revenue declines for the current quarter, with Game Pass price cuts weighing on content and services revenue.
Sharma acknowledged the scale of the challenge in a post last week: "We know we have work to do to earn every player today and into the future."
