Phil Spencer revealed that Microsoft came close to ending its console efforts in 2014 after the troubled launch of the Xbox One, a moment that threatened the company’s future in the games business.
Leadership departure and a fragmented development process
The crisis traces back to July 2013, when Don Mattrick, then president of the Xbox project, stepped down just before the console’s first public unveiling at E3. That change in leadership initiated a chain of problems in the product’s development.
Failures late in Xbox One’s development left the console shipping with unfinished software. Image: robtek/Shutterstock
After Mattrick’s exit, responsibility for the console was spread across multiple parts of Microsoft, decentralizing development. Spencer said this distribution fragmented the team and contributed to the device nearly missing its retail deadline for the holiday season.
Internal assessment under a new CEO
In early 2014, with Satya Nadella newly appointed CEO, Spencer had to determine whether continuing the console project was worthwhile. At the time, the Xbox One was being soundly outsold by its main rival, the PlayStation 4, and the division faced significant organizational strain.
Nadella ultimately chose to keep investing in the Xbox business and placed Spencer in charge of future console development.
Staff departures left few leaders to carry on
Spencer said the decision to stay the course was influenced by the departure of other senior leaders: “I think the reason I ended up with this job, frankly, was because the other leaders had already left,” he said. According to Spencer, he was essentially the last person at the table able to lead Microsoft’s gaming division at that moment.
Admission of missed expectations
Yusuf Mehdi, vice president of Windows devices at the time, acknowledged the company’s shortcomings during the Xbox One rollout. Mehdi said that despite good intentions, Microsoft had failed to deliver what fans wanted from the console.
