Microsoft has announced that it has cut 4,800 jobs (about 2.1% of its workforce) and Xbox will bear a large portion of its latest layoffs.

Amy Coleman, Microsoft’s executive vice president, told employees in a memo that the tech giant needed to focus on areas that can deliver results for customers amid a “rapidly changing industry.”

The widespread layoffs will result in the immediate elimination of more than 1,600 positions at Xbox.

Asha Sharma, who recently took over as Xbox CEO, said in a note to staff that she was “beginning the most significant restructuring in Xbox history.”

Another 1,600 jobs will be lost next year, Sharma said in the note, shared on X, external.

Four Xbox game development studios (Compulsion Games, Double Fine Productions, Ninja Theory and Undead Lab) will also be spun off as part of the changes, he added.

“These changes are about a bigger future for Xbox, not a smaller one,” Sharma said.

“History is full of companies that confuse longevity with inevitability. We will not be one of them.”

Meanwhile, Coleman pointed to changing customer needs in announcing Microsoft’s company-wide cuts.

“Companies can’t choose whether their industry changes; they can only choose whether they change with it,” he said.

He noted that while the company would not replace lost roles with AI, “what is true is that AI is changing the way work is done.”