Phil Spencer is retiring from Microsoft after 38 years. Asha Sharma is the new CEO of Microsoft Gaming. Satya Nadella put both facts on the official Microsoft blog on February 20, 2026, the same day Spencer told staff in a memo titled “A new chapter for Microsoft Gaming.” I went back to that blog. The handoff is the story. The nostalgia is optional.
Spencer started as an intern in June 1988. Nadella’s note is specific about the run after that. “Over 38 years at Microsoft, including 12 years leading Gaming, Phil helped transform what we do and how we do it.” He expanded the business across PC, mobile, and cloud, “nearly tripled the size of the business,” and helped shape the strategy through the Activision Blizzard, ZeniMax, and Minecraft deals. Those are Nadella’s nouns. I am not adding a trophy case he did not write.
Sharma Has the Chair. Booty Has the Games.
Sharma becomes Executive Vice President and CEO of Microsoft Gaming, reporting to Nadella. Until that announcement she was president of CoreAI product. Nadella’s resume line is Instacart chief operating officer, a vice president at Meta, and two years back inside Microsoft building platforms. Matt Booty becomes Executive Vice President and Chief Content Officer, reporting to Sharma. Nadella says the group now spans nearly 40 studios across Xbox, Bethesda, Activision Blizzard, and King. The franchise list in that sentence is Halo, The Elder Scrolls, Call of Duty, World of Warcraft, Diablo, Candy Crush, and Fallout.
Spencer’s memo is the one that names Sarah Bond. “As part of this transition, Sarah Bond has decided to leave Microsoft to begin a new chapter.” He credits her with platform strategy, Game Pass, cloud gaming, hardware launches, and “some of the most significant moments in our history.” That is the official sentence on Bond. I am not inventing a reason she walked, because the memo does not give one.
He Told Nadella Last Fall
“Last fall, I shared with Satya that I was thinking about stepping back and starting the next chapter of my life.” That is Spencer, not a rumor mill that had already tried this story once. The blog says last year is when he made the decision, and that succession planning ran from there. He will stay in an advisory role through the summer “to support a smooth handoff.” Summer is the window they wrote down. I am not turning it into a last day.
On @XboxP3, Spencer posted a shorter public note the same day. “It’s rare in life to know when a chapter is closing, but after 38 years at Microsoft, that moment has arrived for me. I’ve made the decision to retire and begin the next chapter of my life.” He called the intern year 1988 again, thanked the people who made the work “full of joy and wonder,” and closed the way he has for a decade: he will keep playing. “I’ll see you online.”
Her First Job Is Protecting the Work
Sharma’s first staff note is on the same blog. “Today I begin my role as CEO of Microsoft Gaming.” She feels humility and urgency. Her first job, she writes, is simple: “understand what makes this work and protect it.” The three commitments are great games, the return of Xbox starting with console, and what she calls the future of play. The line people will quote is the one about AI: “we will not chase short-term efficiency or flood our ecosystem with soulless AI slop.” Games, she writes, are “art, crafted by humans.” Booty, on the same page, says there are “no organizational changes underway for our studios.”
Nadella’s other number is the one Xbox will keep repeating. “Today we reach over 500 million monthly active users.” He also notes Xbox’s 25th year. That is the official scale of the chair Sharma just sat in. The primary source is Microsoft’s February 20 blog. Watch @Xbox for the North American account, and @XboxP3 if Spencer still feels like posting as a player. Sharma’s public Xbox page is already live on Xbox Wire. The rest is a 38-year intern who decided, on the record, that the chapter is closed.