Washington. Microsoft is cutting 4,800 jobs, or about 2.1% of its global workforce, including roughly 1,600 positions at its Xbox gaming division, as part of a broader restructuring aimed at improving the business amid intensifying competition.

The company announced the layoffs on Monday, saying the move marks the beginning of a wider effort to "reset" Xbox. More job cuts are expected later this year as part of the reorganization.

"Our business today is not healthy," Xbox CEO Asha Sharma, who took over the gaming division earlier this year, said in a memo to employees. "We are operating at margins that are three to 10 times lower than comparable platform and publishing businesses."

Sharma said the gaming industry is grappling with a severe "hardware crisis" as the cost of console components continues to rise, putting pressure on profitability. Xbox competes with Sony's PlayStation and Nintendo's Switch in the global console market.

In addition to the 1,600 Xbox layoffs announced Monday, Sharma said the division expects to eliminate another 1,600 jobs during the current fiscal year, which began last week. Microsoft is also spinning off four game development studios it had previously acquired.

The restructuring comes nearly three years after Microsoft completed its $69 billion acquisition of Activision Blizzard, the maker of blockbuster franchises such as Call of Duty. At the time, Microsoft said the deal would strengthen its game development portfolio and support a Netflix-style gaming subscription strategy.

"While those businesses have created meaningful value, they did not grow at the pace we expected," Sharma said.

The Xbox reductions are part of broader layoffs across Microsoft, which Chief People Officer Amy Coleman said reflect evolving customer needs rather than automation.

"I also want to be direct that the roles eliminated today are not being replaced by AI," Coleman wrote in a company blog post.

The latest layoffs follow voluntary buyout offers made to approximately 8,750 employees in May. According to Coleman, more than 30% of eligible workers accepted the retirement packages.

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