Microsoft prepares for a fresh round of job cuts while teasing ambitious plans for the next-generation Xbox. The tech giant plans to streamline its workforce, particularly in sales and marketing, even as excitement builds around a new Xbox console and potential handheld device. This mix of layoffs and product innovation highlights Microsoft’s efforts to manage innovation, cost efficiencies, and market expansion.
What’s Happening & Why This Matters
Microsoft plans to announce thousands of job cuts early next month, just after its fiscal year ends. According to Bloomberg sources, these layoffs will affect multiple departments, with sales and marketing teams taking the biggest hit.
In April 2025, Microsoft cut 6,000 jobs to reduce management layers and adapt to new market demands. Back then, sales and marketing teams mostly avoided cuts. Now, the company aims to rely more on third-party firms for marketing to small and mid-size customers. This strategy will help reduce operational costs by shifting from full-time staff to gig workers for short-term campaigns.
As of June 2024, Microsoft employed 228,000 people globally, with 45,000 in sales and marketing. The new layoffs could reset these numbers drastically.
While cutting jobs, Microsoft continues to invest heavily in AI. The company pledged over $80 billion for data centers dedicated to AI development. It’s unclear whether these investments are directly related to the layoffs, but they indicate Microsoft’s focus towards future technology.
Amid these shifts, Microsoft also fuels excitement for the next Xbox. The company announced a “strategic multi-year” partnership with chipmaker AMD, which supplied processors for previous Xbox models. This partnership will co-engineer silicon across multiple devices, including new consoles and handhelds.
Xbox President Sarah Bond hinted at an Xbox experience “not locked to a single store or tied to one device.” This could mean Xbox games will reach platforms like Steam or various handheld devices. AMD’s SVP for Computing and Graphics, Jack Huynh, called the collaboration a “bold, shared vision” to push gaming boundaries and create an “open, player-first ecosystem.”
Rumors suggest Microsoft is preparing a handheld Xbox, continuing efforts after a brief pause in development. The company recently partnered with Asus for the upcoming ROG Xbox Ally and Ally X handhelds, both of which are powered by AMD chips. These handhelds target gamers on the go, but pricing and release dates remain undisclosed, though they are expected later in 2025.
Microsoft faces stiff competition. Sony’s PlayStation 5 continues strong sales, Nintendo’s Switch 2 enters the market, and Valve’s Steam Deck leads handheld PC gaming.
TF Summary: What’s Next
Microsoft’s upcoming layoffs target sales and marketing amid burgeoning AI and gaming investments. The next Xbox generation, including potential handheld devices, promises to shake up the gaming market.
The Xbox strategy sees greater device compatibility and open ecosystems, competing directly with Sony, Nintendo, and Valve. As Microsoft reorganizes its workforce, gamers are eagerly watching for the next wave of Xbox rumors — confirmed or otherwise.
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