Microsoft has recently been under the spotlight due to rumors that it plans to cease console development. While Microsoft denied these specific reports, former executive Mike Ybarra recently stated that pulling back from hardware and exclusive games could be a sound business strategy for the company in the current market.
Ybarra highlighted that Microsoft’s decision not to include the Xbox operating system on devices like the new ROG Ally X, opting for Windows instead, makes sense. He believes this is because Microsoft is essentially moving away from the dedicated hardware and exclusive game business.
He elaborated that a dedicated operating system is crucial for any console, ensuring ease of use and security. However, if Microsoft acts primarily as a publisher, embracing Windows becomes logical. Ybarra noted that piracy is a concern, but platforms like Steam help mitigate this due to their seamless experience and strong return policies, something he feels Windows currently lacks.
Ybarra argued that Microsoft stepping away from its own hardware could benefit its business, but only if the company consistently develops excellent games and commits to releasing them on major platforms like Steam, PlayStation, and Nintendo. He stressed that this is a significant “if.”
He candidly stated that only someone foolish would continue developing console hardware if all games eventually become third-party releases. To reverse this, Microsoft would need to return to platform exclusives, produce great hardware at a loss, and fight to dominate the living room – a strategy he believes they are not pursuing. Ybarra criticized their current ambiguous approach, suggesting it causes unnecessary harm without clear direction.
Historically, Microsoft, like its competitors Sony and Nintendo, focused on exclusive titles to drive console sales. However, Microsoft significantly broadened its game releases to rival platforms earlier this year, a strategy that appears to be yielding positive results, with Xbox games frequently topping PlayStation sales charts.
Ybarra emphasized the need for Microsoft to articulate a “clear strategy” to quickly address existing issues and prioritize execution. Without such clarity, he warned, Microsoft’s gaming division faces a slow and painful decline, likening it to a “death by a thousand needles.”
He used a strong metaphor: “Needles are worse than cuts. It feels like they keep pushing the needles in further and further. Cuts heal—I don’t see any healing happening—just more needle pushing deeper and deeper.”
Ybarra also criticized Microsoft’s “This is an Xbox” advertising campaign, which aims to inform consumers that Xbox games can be played on various devices they might already own, not just Xbox consoles. He deemed the campaign ill-timed and conceptually flawed.
He further explained his view: “Xbox is about games—games always rule the world. And if there isn’t parity between the console and any other device, then it’s just not an Xbox. It’s confusing—whoever came up with this clearly doesn’t play games.”
In contrast, Xbox president Sarah Bond recently confirmed to a publication that Microsoft is developing “next-gen hardware,” following a major multi-year partnership with AMD. She stated, “We are always listening to what players and creators want. When there is demand for innovation, we are going to build it.”
Microsoft has also faced recent criticism, including a 50% price increase for Xbox Game Pass Ultimate, which has deterred some subscribers. The company has also implemented job cuts, closed studios, canceled games, partnered with Israel’s Ministry of Defense, and committed billions of dollars to artificial intelligence initiatives.
The article concludes by noting Mike Ybarra’s extensive career at Microsoft, where he spent 19.5 years, rising from a systems engineer to corporate vice president at Xbox. He later served as president of Blizzard before becoming CEO of PrizePicks in 2024.