“Catastrophic Mismanagement” And AI Gambits Led To Mass Xbox Layoffs, Expert Says

Microsoft has announced sweeping layoffs and other dramatic changes resulting in 4,800 layoffs across the company, including 3,200 at Xbox specifically. What's led to this? According to one expert, Microsoft CEO Satya Nadella and his "catastrophic mismanagement" of the company is to blame.

Ed Zitron, an author who specializes in covering the technology space and is the CEO of EZ Primary Research, offered a blistering take on Microsoft's management in response to the mass layoffs.

"Catastrophic mismanagement by a company run by a sub-McKinsean imbecile that hires other losers to move money around to hide how bad his AI plays are. Microsoft is a disgrace to the software industry," he said.

Zitron has been an outspoken critic of elements of AI in particular, recently appearing on CNBC to offer the bear case against generative AI.

"One of the biggest lies of the AI bubble is that Microsoft, Google, Amazon and Meta are 'growing because of AI,'" he said recently. "In reality, they're using the continued growth of their other business units to cover the meager returns from AI, and the massive waste of their trillion+ in capex."

Microsoft, of course, is massively invested in AI, and Zitron appears to be suggesting here that some of the issues that led to these dramatic cuts at Xbox are in some ways tied to Microsoft's AI plays.

In its statement today addressing the cuts, Microsoft said it is laying off thousands of people because the world is changing and Microsoft is attempting to adapt. Microsoft also pushed back against the theory that the roles eliminated today are being replaced by AI, though the company did admit that, "AI is changing how work gets done."

Investors tend to reward companies that cut costs, but that doesn't appear to be the case this time with Microsoft, as the company's stock price is down today. That continues a trend for Microsoft, as shares are down 18% year-to-date and 22% in the past year.

The cuts to Xbox include not just staff layoffs, but also Microsoft divesting of five development studios. Double Fine and Compulsion are regaining their independence, while Ninja Theory and Undead Labs are being sold. Arkane Lyon, meanwhile, is in the "consultation" process to determine its fate and the fate of Marvel's Blade.