Microsoft is cutting 4,800 jobs, about 2.1% of its global workforce, including a large number of workers at its Xbox video game business.
The layoffs included 1,600 Xbox workers, with more to come this year in a broader reorganization designed to "reset" Xbox as it faces heightened competition, the company said Monday.
"Our business today is not healthy," said a memo from Xbox CEO Asha Sharma, who took over the gaming division earlier this year. "We are operating at margins that are 3-10x lower than comparable platform and publishing businesses."
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Sharma said the industry, in which Xbox competes with Sony's PlayStation and Nintendo's Switch, is facing a severe "hardware crisis" as costs soar for console components.
She said to expect another 1,600 job cuts over the course of the fiscal year that began last week. The company is also spinning off four video game development studios previously acquired by Microsoft.
The Xbox cuts are in addition to broader Microsoft layoffs that the software giant's chief people officer Amy Coleman tied to unspecified changes in customer needs.
"I also want to be direct that the roles eliminated today are not being replaced by AI," Coleman wrote in a blog post.
The layoffs followed voluntary buyouts that Microsoft began offering to about 8,750 people in May. More than 30% of eligible workers accepted those voluntary retirement offers, Coleman said Monday.
