Microsoft’s Xbox division, long a cornerstone of the company’s gaming ambitions, faces fresh turbulence. On May 5, 2026, CEO Asha Sharma sent a memo to staff announcing the end of Copilot AI development for consoles and a wind-down of its mobile version. These moves cap a whirlwind three months since Sharma replaced retiring veteran Phil Spencer in February.
Sharma didn’t mince words. “Xbox needs to move faster, deepen our connection with the community, and address friction for both players and developers,” she wrote, as Dexerto reported. The features, she added, no longer fit the path ahead. Right now, it is too hard to ship impact quickly. We spend too much time inward instead of with the community.
Revenue pressures drive the shift. Xbox has posted declining sales amid broader Microsoft gaming struggles, including studio closures and Game Pass pricing experiments. Sharma’s memo arrives days after earnings showed player growth lagging ambitions, prompting vows to get the business back on track, per her X post.
But here’s the twist. Even as Copilot falls, Sharma imports four executives from Microsoft’s CoreAI group—where she previously led product as president. Jared Palmer, ex-CoreAI VP and GitHub senior VP, takes a technical staff role spanning product, engineering, tools, and infrastructure. Tim Allen, CoreAI design and research lead, now heads Xbox design. Jonathan McKay, former OpenAI growth head for ChatGPT, becomes Xbox growth chief. Evan Chaki, CoreAI general manager, leads a forward-deployed engineering team. David Schloss, Instacart product and growth senior director, oversees subscriptions and cloud.
This infusion signals AI’s pivot, not exit.
Sharma calls it bringing new voices with consumer and technical expertise Xbox lacks. Yet two longtime Microsoft hands depart. Kevin Gammill, corporate VP for user experience, game development, and publishing platforms, leaves after 24 years. Roanne Sones, corporate VP for devices and ecosystem, takes leave this summer before an advisory role—also 24 years in.
Context matters. Sharma joined Microsoft in 2024 from Meta and Instacart stints. Her February ascension followed Spencer’s 38-year tenure and Sarah Bond’s exit as Xbox president. That shake-up raised eyebrows; an AI exec at gaming’s helm? Early moves included Game Pass price cuts and Project Helix teases—a next-gen console codename.
Copilot’s demise stings less than it might. Announced for consoles in March 2026, the AI companion promised in-game tips and guides. But gamers met it with shrugs. Mobile integration never gained traction. Now, both vanish. An Xbox spokesperson confirmed to PC Gamer: console development stopped entirely; mobile winding down. No replacement named.
And the irony? CoreAI alumni arrive hours after the cuts. X users pounced. “She announced Copilot her first month and cancelled it the same day she brought 4 members of her core AI team,” one posted. Others hail the purge: “Crazy how the ex president of AI at Microsoft… understands how nobody wanted that shit.”
Sharma’s playbook emerges. Prioritize speed. Cut non-essentials. Blend AI smarts with gaming fundamentals. But skeptics linger. Xbox hardware revenue dipped steadily from Q2 2024 through Q3 2025, per Yahoo Finance. Game Pass Ultimate slashed from $29.99 to $22.99 monthly. FanFest revives. Branding drops “This is an Xbox.” Yet pipeline games trace to Spencer’s era.
Expect more. Sharma vows human-crafted titles, no low-quality AI slop. Community ties strengthen via X replies. But delivery counts. Microsoft’s AI bets falter elsewhere—Copilot subscriber share slid to 11.5% in six months, as one analyst noted on X. Nadella’s interventions haven’t fixed basics like Word table inserts.
Xbox treads a tightrope. CoreAI talent could supercharge developer tools, cloud gaming, growth hacks. Or dilute focus amid revenue woes. Two veterans out. Four AI imports in. Copilot gone.
Sharma’s first big test.
Gamers watch closely. Microsoft promises updates as decisions firm. For now, Xbox accelerates—sans one AI experiment.
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