Xbox CEO Sharma Triggers 100-Day Reset Plan Amid Component Crisis

It's fair to say that even as beloved by fans as Phil Spencer was at the helm of Xbox, his replacement after leaving Microsoft in Feburary, Asha Sharma, inherited a mess. Many would argue that Xbox lost its way over the years, from focusing too heavily on game streaming and not enough on exclusives. Both are issues Sharma has promised to resolve, but the problems run much deeper, and so she is sharing some candid remarks about a major Xbox reset that will take place over the next 100 days.

In a blog post on Xbox Wired, Sharma highlights recent successes of the Xbox brand, such as now having more active partners than ever before, the re-introduction of exclusives with Gears of War: E-Day and Clockwork Evolution, and signs of growth to Game Pass after over eight months of decline.

Those successes aside, Sharma also highlighted a need to become more agile and "move faster" in the direction of an aligned vision, while acknowledging that Xbox has "made mistakes, and will continue to make them" to some extent. 

"Excluding Activision Blizzard King, over the past five years, we have spent over $20 billion on ongoing investments in our content, platform, and hardware subsidy, but our annual revenue has declined nearly half a billion during that time. Going forward, this cannot continue," Sharma says.

A major reason for some of Xbox's financial struggles is what Sharma accurately describes as a hardware component crisis. Sharma says that when she took over as CEO in February, the price of console storage was twice as high as last fall, and those costs have since doubled yet again. Looking ahead to 2027, she anticipates storage costs being a factor of 5x higher than what Microsoft was paying just two years ago.

"Memory costs have followed a broadly similar trajectory. While the entire industry is facing a components crisis, we believe we have been impacted more greatly than many of our peers due to the choices we made over the last half decade," Sharma says. "We are currently unable to make as many consoles as players want to buy, and we need a new business model and partnerships for hardware as we remain committed to Helix."

The good news there is that Project Helix, the codename for Microsoft's next-generation game console, is most definitely still on the roadmap. And the better news is, Sharma and the team are listening to feedback from gamers, which is helping to shape the direction of Xbox, including a partial return to exclusives.

The bad news is that the future is very much uncertain and tough decisions will need to be made. Sharma says the current infrastructure "is not built for the battle ahead," citing too much complexity, too many dependencies, and too much reliance on vendors. Hence the 100-day reset plan.

"For some of you, these realities will be surprising and even frustrating to discover. We won’t succeed by hiding hard truths, nor will we succeed by doing the same thing and expecting different results. Like the ‘everyday wins’ mentality from the first 100 days, we will sprint to make progress against hardware, content, experience, and services together," Sharma says.

What are those hard truths? We'll find out in time, but according to Bloomberg's Jason Schreier, "significant" layoffs are looming. Microsoft is reportedly going to issue a round of job cuts after its next earnings report at this month, as part of major cost-saving initiatives to Xbox that will also see budget cuts to marketing and other areas of the business.