Phil Spencer and Sarah Bond, Xbox in Major Microsoft Gaming Shake-UP 

Phil Spencer, the longtime head of Xbox and CEO of Microsoft Gaming, is retiring from Microsoft after nearly 40 years at the company. Alongside him, Sarah Bond, president of Xbox, is also leaving Microsoft. The changes mark one of the biggest leadership shifts in Xbox history and signal the start of a new era for Microsoft’s gaming business. 

Spencer’s retirement is effective Monday, February 23, 2026. In an internal memo, Microsoft CEO Satya Nadella said Spencer decided to step down in the fall of 2025, and the company has spent months planning his succession. Nadella praised Spencer for helping transform Xbox into a global gaming brand and for his role in building Game Pass, new consoles, and Microsoft’s broader gaming strategy. 

In his own note to staff, Spencer said he told Nadella last year that he wanted to “step back and start a new chapter” in his life. He described Xbox as more than a business, calling it a community of players, creators, and teams who care deeply about games. He thanked Microsoft colleagues and promised to support the transition as the company prepares for the future. 

Sarah Bond’s departure comes at the same time as Spencer’s exit. She has been widely seen as a key architect of Xbox’s modern strategy and was often viewed as a likely future leader of Microsoft Gaming. In an internal message, Spencer said Bond had helped shape Xbox’s strategy, Game Pass, new hardware, and some of the most important moments in Xbox history. He wished her well as she moved on to a “new chapter” outside Microsoft. 

Microsoft has already named its next leaders. Asha Sharma, who currently runs CoreAI products at Microsoft, will become the new CEO of Microsoft Gaming. Sharma has outlined three priorities: delivering great games, revitalising Xbox, and defining the future of play, while staying close to the core Xbox community and developers. Xbox Game Studios head Matt Booty is being promoted to Executive Vice President and Chief Content Officer, with a focus on game development and content across Microsoft Gaming.

The timing of the exits follows months of speculation about Spencer’s future. In July 2025, Microsoft publicly stated that Spencer was “not retiring anytime soon,” but later confirmed that he had privately decided to leave by the end of the year. Analysts say the shake-up reflects Microsoft’s push to integrate AI more deeply into gaming and rethink Xbox’s role in a market dominated by cloud subscriptions and mobile devices.

For Xbox fans, the big question now is whether the new leadership will keep the same focus on Game Pass, first-party studios, and console hardware. Early signals from Sharma suggest Microsoft still wants to honour Xbox’s legacy while investing in new ways to play. With Spencer and Bond gone, the industry will be watching closely to see how Xbox evolves under its new bosses.