Xbox Under Asha Sharma: Layoffs, AI Bets and a New Hardware Roadmap

Since taking over Microsoft’s gaming division in February, CEO Asha Sharma has cut costs, launched an AI research unit and set out plans for a new family of Xbox devices under Project Helix.

Xbox is in the middle of its biggest reset in years. Asha Sharma, appointed CEO of Microsoft Gaming on February 20, 2026, is pairing cost discipline with big bets on artificial intelligence and new hardware. Her goal is to return Xbox to growth in both players and revenue by June 2027.

An outsider’s route to the top

Sharma did not come up through game development. She started her career in marketing at Microsoft, then moved to Meta, where she led product work on messaging across Facebook and Instagram. In 2021 she became chief operating officer at grocery-delivery firm Instacart. She returned to Microsoft in 2024 to lead product for its CoreAI organisation, which includes work connected to GitHub Copilot.

She succeeded Phil Spencer, who retired after a long career at the company. Her mix of product, operations and AI experience is unusual for a gaming chief, and it shows in her priorities.

A leaner Xbox

The most visible change is the restructuring. Microsoft announced about 3,200 planned job cuts across its gaming business in July 2026, along with changes affecting four studios. According to Gadgets Now, 1,868 employees had left by October 20, with more reductions expected.

The company says the aim is to concentrate spending on its strongest franchises and reduce overlap between teams. Sharma has outlined four priorities:

• Strengthening the Xbox platform
• Building globally successful franchises
• Growing Minecraft’s creator ecosystem
• Finding new opportunities around established intellectual property

Xbox Labs and the role of AI

In October, Microsoft introduced Xbox Labs, a unit that brings together developers, engineers and scientists to test emerging technologies and turn them into tools and experiences. Its focus appears to be practical uses of AI, such as speeding up development, enabling experimentation and making existing game worlds more accessible, rather than adding AI to everything.

The risk is that technology gets ahead of design. Players will judge Xbox Labs by whether its work improves the games they play.

Project Helix: a family of devices

Project Helix is Microsoft’s plan for the next generation of Xbox hardware. Sharma has suggested it may go beyond one traditional console, with devices built by Microsoft and by partners. The report points to a next-generation handheld for the 2027 holiday season and a flagship Helix console around the 2028 holiday season.

Cost is a concern. The report cites internal projections of $1,200 to $1,800 for the console, but pricing is not final and Microsoft has not confirmed it. Helix will also have to settle how Xbox’s gaming-focused software relates to Windows.

Game Pass and exclusives

Game Pass could change as well. The report describes a more flexible model in which players choose among features such as cloud gaming, online multiplayer and console benefits. Whether that works will depend on pricing and the strength of the game library.

Microsoft is also putting renewed weight on exclusive titles and major franchises, giving buyers clearer reasons to choose Xbox. Minecraft, with its large creator community, is a key example of a brand with room to grow.

Is Xbox for sale?

Sharma has publicly dismissed speculation that Microsoft is preparing to sell the gaming business, saying Xbox is not for sale. Gaming also supports Microsoft’s consumer reach and cloud infrastructure, which gives it value beyond its own revenue.

What to watch

Sharma has to balance cost control, creative freedom, hardware ambition and AI experimentation, and these goals do not always pull the same way. The next milestones are the June 2027 growth target, the 2027 handheld and the 2028 console. In the end, her tenure will be judged by the quality of Xbox’s games and the health of its business.

Note: Figures such as job cuts, console pricing and release windows come from a Gadgets Now report and internal projections.