Hard times have come to Microsoft employees. Thousands of Microsoft team members reported to work following the US holiday weekend to learn their jobs no longer exist, with Redmond gutting its Commercial business and Xbox team, and spinning off several game studios to cut costs. Microsoft human resources boss Amy Coleman announced that the company is eliminating some 4,800 roles Monday morning in a letter to employees the company published online. Coleman explained that Microsoft is doing the layoffs, which will reduce its global headcount by around 2.1 percent, because the business of technology is changing, which means that Redmond can’t be the same slow, unwieldy vessel it has been for years. “The way technology is built, deployed, and used is transforming faster than at any point in my time here,” explained Coleman, who has worked in HR at Microsoft for nearly 17 years. “That means we will need to adjust resources and roles and shift how we operate so we can have the greatest impact for our customers.” It doesn’t help that Microsoft’s stock price has fallen by nearly a quarter in the past 12 months either, although Coleman didn't mention that in her note. She did, however, mention AI. “I also want to be direct that the roles eliminated today are not being replaced by AI,” the Microsoft exec said before couching the statement in a necessary detail. “At the same time, what is true is that AI is changing how work gets done.” So no one is going to be forced to start working alongside a digital replacement for their former human colleague, but AI probably means fewer people overall. “Some of the tasks we do every day can now be automated, and that means we all need to keep learning, keep building new skills, and keep adapting as the work evolves,” Coleman added. How long until a bot can do an HR executive’s job, we wonder. Coleman noted that two units will be the heaviest hit by Monday’s announcements: Microsoft Commercial Business (MCB, which includes sales, marketing, and operations), and the Xbox team. It's also going to unload several gaming studios that Microsoft likely spent hundreds of millions to acquire over the past few years. Coleman didn’t share much about how the cuts will affect either group, though she did say that the MCB moves build on the company’s announcement from last week that it was spinning up a new MCB subsidiary called Microsoft Frontier Company to help customers deploy AI and realize returns on their rather costly investments. Xbox boss doesn't beat around the bush Asha Sharma, Microsoft’s Xbox division chief, was honest in her assessment of the state of her division, telling employees in an email posted on XBox Wire that the Xbox business “is not healthy.” Sharma said that she intends to cut the headcount on the Xbox team by 3,200 people during the 2027 fiscal year, which began on July 1. Monday's cuts included 1,600 from the group. The Xboss also admitted that Microsoft’s habit of buying up every promising independent game studio is “neither possible nor desirable” after several years of pursuing such a strategy, which is part of the reason that the company is cutting Compulsion Games, Double Fine Productions, Ninja Theory, and Undead Labs loose from their corporate leash. The former two will be transitioning to full independence, while the latter pair have reportedly entered into terms to join new ownership. All of the studios’ various IPs and upcoming games are going with them. Microsoft is making cuts to remaining studios too, with Activision, Bethesda/ZeniMax, Blizzard, King, Mojang and Xbox’s own game studio all trimming staff and shifting their directions toward higher-priority projects. Redmond is reducing management layers as part of the Xbox restructuring as well, and the division now has a chief operating officer for the first time ever. The changes won’t be ending there, either, Sharma said. “It is not possible to make all the necessary changes in a single day, and I wanted to be direct about the scale,” she explained. “History is full of companies that mistake longevity for inevitability. We will not be one of them.” The fact Sharma had to say that isn’t encouraging, for either Xbox or Microsoft's other less-than-popular platforms. ®
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