As news of Microsoft cutting 3,200 employees at Xbox continues to make headlines, CEO Asha Sharma explains that it's been a long time coming, as the company couldn't weather its growing storm.
In a new statement to Fortune following news of the Xbox layoffs, Sharma provides a bit of insight into what she dubbed "the most significant restructure in Xbox history."
She explains, "In order to grow, we made a bunch of bets… and as we did that, we inherently didn't focus on the core business. The number one measure of your strategy is what you put your resources behind, and we simply spread ourselves too thin."
Part of this new restructuring plan includes Xbox reeling itself back into focusing on its own flagship console – one the company has arguably placed on the sidelines in lieu of Game Pass and other hopeful undertakings – and removing various management layers for more centralized teams.
Overshadowing all this is also the surging cost of hardware – the company announced yet another price hike for its consoles late last month, noting that "console storage and memory prices have increased by more than 2.5x and we expect another doubling by the fall of 2027." Interestingly, though, Sharma notes that Xbox potentially could've gotten through this rough patch… had it been "healthy" beforehand.
"A healthy Xbox could weather the shock of the hardware crisis," she admits. "With an unhealthy Xbox, it becomes really challenging, and it accelerates a lot of the changes we need to make."
That's understandable – as per her own words, Xbox sees three to 10 times lower margins than "comparable platform and publishing businesses," after all. Those aren't great numbers for what was once a leading name in hardware, to say the least.
Sharma says that turning Xbox back to its former glory will take time, however. According to her, executives are toying with new business models for the company's hardware, too, like expansions to consumer programs that lower financial barriers (think "buy now, pay later") and making Xbox more available on mobile and PC to reach a wider breadth of players.
She concludes, "Our core has to be healthy, and that will be necessary but not sufficient."
Here's hoping Microsoft and Xbox in particular manage to turn things around. Plenty of folks – and studios – depend on it, and it's not difficult to see that Sharma's right about the health of the company.
