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Fridays news of a major shake-up at Microsofts Xbox division caught the gaming world by surprise. Phil Spencer, who has run Xbox for almost 12 years, announced his retirement, effective immediatelyjust months after Microsoft insisted he was not retiring anytime soon. Asha Sharma, the president of Microsofts CoreAI product, was tapped to run the division. Once a powerhouse earner, Xbox has seen its profitability and influence shrink in recent years. (Xbox president Sarah Bond, long seen as Spencers heir apparent, was passed over and also left the company.) Sharma may face an uphill battle. Microsoft has not reported updated Xbox console sales or Game Pass subscription numbers in years. The available figures havent been encouraging. Xbox hardware revenue fell 32% year over year in the recent holiday quarter. Overall gaming revenue dropped 9%, and Xbox content and services, which includes Game Pass, declined 5%. Sharma has already taken some knocks online for lacking a deep history in video games. Some of that online blowback reflects the sexism that often runs rampant in gaming. (Sharma will be the first woman to run a major console manufacturer.) But criticism of her gaming pedigree also reflects a kind of gatekeeping. Strauss Zelnick, CEO of Take-Two Interactive Software, has said he was not a gamer when he took chargeand still isnt. Yet Take-Two has delivered a string of hits under his leadership, most notably the Grand Theft Auto franchise, and its share price has increased fifteenfold since he took the job. I don’t think anyone wants or needs my specific creative expertise, such as it is, Zelnick once said. It’s my job to attract, retain, and provide the resources to the best creative talent in the business. Dwindling sales and a divided focus Time will tell if Sharma follows that same path. But if she does, instead of focusing on big individual launches, shell have to persuade gamers to buy both the hardware and a subscription service that increasingly makes that hardware feel optional. The Xbox Series X and Series S have faced inventory issues in recent months and remain expensive when available. With memory shortages affecting a wide range of consumer technology products, a price cut anytime soon appears unlikely. At the same time, Microsoft has been pivoting away from consoles, expanding Game Pass across multiple platforms, including as an app on Samsung TVs. (An Xbox mobile store was planned but never launched.) Despite that shift, Microsoft has also been working on a next-generation Xbox, once expected to debut next year, though that timeline could slip due to component shortages. Starting over? Sharmas promotion could mark a reset, shifting focus back to consoles and exclusive titles rather than the Xbox anywhere strategy of recent years. Even then, some hurdles remain. Microsofts hands are tied with its biggest franchise, Call of Duty, which it acquired through the Activision-Blizzard takeover three years ago. Under its agreement with regulators, Microsoft must continue offering those games and features to Sony through 2033. Still, the company has deep development resources, even after steep layoffs. The Halo franchise has struggled but could rebound with a strong release. Bethesda Softworks, acquired in 2021, is developing a new Elder Scrolls title and also controls proven franchises such as Fallout and Doom. Microsoft also has Gears of War, Fable, and Forza, and enjoys strong relationships with independent developers. Refocusing on consoles could require changes to Game Pass. The services appeal lies in offering new titles on day one without requiring individual purchases. But with AAA games now costing $200 million or more to develop, Game Pass will need either a surge in subscribers or structural changes to remain viable. (A price increase could be challenging, as the top tier already costs $30 per month.) Whatever direction Sharma chooses, she faces a steep climb. Spencer may have been beloved by gamers, but Microsofts biggest bets of the past six years have largely fallen short. And as headwinds gather across the gaming industry, Microsoft is no longer the dominant force it was in the Xbox 360 era. Regaining that ground will require steady leadership.
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E-Commerce
It’s a good day to be the pharmaceutical giant Eli Lilly. This morning, the company unveiled its latest innovation in the weight-loss drug wars: the KwikPen. Per a press release , the KwikPen contains a months-worth of Zepbound, Eli Lillys GLP-1 designed to combat obesity, and it’s designed to make taking the medicine more convenient. Alongside the announcement of this new innovation, Eli Lilly’s main competitor, Novo Nordisk, dropped the news that its experimental drug, CagriSema, perfomed worse for patient weight loss in a head-to-head trial against Eli Lilly’s proprietary drug, tirzepatide. A November study from the health policy non-profit KFF found that about one in eight American adults were using a GLP-1 for weight loss or to treat a chronic condition. And as the weight-loss drug market soars, its two most dominant playersEli Lilly and competitor Novo Nordisk, the maker of Ozempicare battling it out to offer the most convenient, most effective, and least expensive iterations of their respective drugs. Right now, Eli Lilly appears to be the leader in the GLP-1 race amidst multiple difficult headwinds for Novo Nordisk. As of this writing, Novo Nordisk stock is down nearly 16% since market open, while Eli Lilly is up by nearly 5%. Weight-loss drugs take new, more convenient forms Over the past several months, both Eli Lilly and Novo Nordisk have invested in novel drug formats to retain customers and reach new audiences. Back in December, Novo Nordisk received FDA approval for a first-of-its-kind, once-daily pill for weight loss. The pill, which is an oral form of Novo Nordisks GLP-1 Wegovy, offers a less invasive way for users to administer weight-loss drugs, which are typically delivered via an injector. Eli Lilly is currently in the testing phases of its own oral GLP-1, but it does not yet offer anything similar to the Wegovy pill. In the meantime, the KwikPen will presumably make taking Zepbound a bit easier for Eli Lillys customer base. Currently, patients use a separate autoinjector for each of their weekly doses of the drug. Each KwikPen, by contrast, comes pre-loaded with four doses, meaning one pen lasts for a full month. Its available in six strengths, ranging from 2.5 mg to 15 mg. For cash-paying patients, the KwikPen will be available via Eli Lillys direct-to-consumer website, LillyDirect. Eli Lilly pulls ahead Eli Lilly may be lagging behind Novo Nordisk in GLP-1 pill design, but its notched several more significant wins against its top competitor in recent months. Novo Nordisk has been fighting an uphill battle as the weight-loss drug market becomes more crowded, including by the proliferation of compounded (aka copycat) versions of Ozempic and Mounjaro made by smaller manufacturers. In its fourth quarter report, released in early February, Novo Nordisk announced strong revenue of $12.34 billion, but warned that its sales and profit growth would decline by between 5% and 13% in 2026 amidst growing competition and lower U.S. prices. These same struggles have caused the companys stock price to plummet by more than 55% year-over-year. Meanwhile, Eli Lilly has been buoyed by the major success of Zepbound since its 2023 debut, as customers opt for the medicine given its greater effectiveness for weight loss than Ozempic. In its February fourth quarter report, Eli Lilly boasted revenue of $19.3 billion and guided for its sales to grow by a whopping 25% in 2026. The companys stock has risen by more than 25% year-over-year. Now, Novo Nordisk is taking yet another blow, as a Feburary 23 report showed that its new experimental drug CagriSema could not demonstrate non-inferiority against Eli Lilly’s tirzepatide. Based on Novo Nordisk’s report, “if all people adhered to treatment, people treated with CagriSema 2.4 mg/2.4 mg achieved a weight loss of 23.0% after 84 weeks compared to 25.5% with tirzepatide 15 mg.” As GLP-1 usage continues to become more mainstream, pharmaceutical giants will be fighting an increasingly competitive battle for market share.
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E-Commerce
Boom Supersonic wants to build the worlds first commercial supersonic airliner. Founded in 2014, the company set out to make air travel dramatically fasterup to twice the speed of todays passenger jetswhile also aiming for a smaller environmental footprint. For years, Boom has focused on developing the high-performance engine technology needed to sustain supersonic flight. Though the company has not yet debuted its revolutionary jet, last year it identified a new and potentially lucrative application for its novel technology: generating electricity for the data centers powering the artificial intelligence boom. Many of these data centers want the kind of flexible, around-the-clock energy associated with combined-cycle natural gas turbines. These heavy-duty machines burn gas to spin turbines and generate electricity, then capture the associated heat and use it to spin the turbines some more. As far as fossil fuel generation goes, they are among the most efficient options for dispatchable baseload power. But with demand for these turbines surging and supply increasingly tight, developers are turning to creative alternatives. The upshot of all this creativity is clear: Much of the data center build-out is poised to be powered by natural gasand the climate consequences that come with it. Boom Supersonic inked a $1.25 billion agreement with a developer called Crusoe, which is building a suite of data centers for the artificial intelligence startup OpenAI. The turbine company agreed to provide Crusoe with 29 jet-engine gas turbines that the developer could position at data centers across the U.S. The deal is just one example of developers and tech companies straining to find power sources for the data centers sprouting up nationwide. Metas data center in El Paso, Texas, will draw fuel from more than 800 different mobile mini-turbines. Meanwhile, the construction equipment company Caterpillar has supplied gas engines to a data center in West Virginia. And the developer Crusoe used aeroderivative turbines based on airplane models for its massive Stargate data-center campus in Abilene, Texas, where power demand is a whopping 1.2 gigawatts. Its not just the U.S. New proposed natural gas capacity has surged worldwide over the past year. The energy analysis firm Global Energy Monitor reports that projects totaling more than 1,000 gigawatts of gas-fired power are now in development worldwidea roughly 31 percent jump in just the last year. The United States leads the pack, accounting for about a quarter of that pipeline. More than a third of the new U.S. capacity will power data centers. The analysis also notes that two-thirds of gas project developers in the U.S. have yet to identify who will manufacture their natural gas turbines. This rush to build out natural gas generation will have serious consequences for the climate. Early boosters of the data center boom suggested that new AI facilities would draw power from renewable sources such as solar and wind farms. While that has happened in some cases, developers are also rapidly locking in years of additional fossil fuel usage. An analysis from researchers at Cornell University found that the build-out could add as much as 44 million metric tons of carbon dioxide to the atmosphere by 2030, equivalent to the annual emissions of around 10 million passenger cars. This is a huge proposed build-out, said Cara Fogler, deputy director of research, strategy, and analysis at the nonprofit Sierra Club, which has been tracking gas plant expansions by utilities. Existing coal thats not coming offline and planned gas thats trying to come online are potentially boxing out clean energy. As Silicon Valleys AI boom drives demand for ever more computing power, data center developers have struggled to keep up, largely because securing the massive amounts of electricity needed to run these facilities has become so difficult. The rush has led to long wait times to secure power from traditional utilities. As a result, developers and tech companies are increasingly taking matters into their own hands by generating power on-site. According to an analysis by Cleanview, a data firm tracking the energy transition, at least 46 data centers with a combined capacity of 56 gigawattsequivalent to that of roughly 27 Hoover Damsare using this behind-the-meter approach, as its known in industry parlance. The chief executive of Bloom Energy, a startup that builds behind-the-meter fuel cells for data centers, said in a recent call with investors that the startups order backlog has more than doubled over the past year. On-site power has moved from being a decision of last resort to a vital business necessity, said company executive K.R. Sridhar. He noted that while most of the companys previous business was in states like California with high electricity costs, now states where we are growing fastest have robust natural gas infrastructure and favorable regulatory and policy frameworks for on-site power generation. One of those states is Texas, which is the epicenter of the build-out so far. Unconventional gas power will anchor campuses like that of Titus Low Carbon Ventures, which is building half a dozen data center parks across the Lone Star State. In September, the company signed a deal with power developer Gruppo AB to source Jennbacher gas generating engines, each of which provides just a few megawatts of power. The company will plug in hundreds of these boxy generators to provide baseload power alongside solar and wind. We couldve elected to go with gas turbines, said Jeff Ferguson, the president of Titus, in an interview with Grist. Instead of sourcing traditional gas turbines, he opted to buy reciprocating engines, which are smaller gas-powered generators that are similar to passenger car engines. We think that reciprocating engines are a better solution for data centers, he said, adding that the difference is in the ability to manage transient loads, or rapid fluctuations in power demand that are very common at the facilities. Not only is it unlikely that 200 generators will ever go offline all at once, but the engines are also much faster to start up and stop than turbinesthey can come online in around a minute, as opposed to an hour for a traditional power plant. Ferguson likened it to the difference between accelerating in a Corvette and a jet plane. But experts say these substitute gas sources are even worse for the climate than traditional power plants, which use more efficient combined-cycle turbines that employ both gas and steam. The worst offenders are not turbines at all but rather internal-combustion engines like the ones in most automobiles. Internal combustion [engines] have better ramp up/down time[s] but are less efficient when compared to a gas turbine, said Jenny Martos, a researcher who runs the gas plant tracker for Global Energy Monitor. All gas-power technologies produce emissions, but generally engines produce more emissions than the others. Texas has almost 58 gigawatts of natural gas power in various stages of planning and construction, according to the latest estimates from Global Energy Monitor. Thats more than the next four states combined, and more than every country on Earth except for China. Nearly half of the power plants under construction in Texas will provide power exclusively to data centers, without connecting to regional energy grids. hese projects span the state, from OpenAIs Stargate campus in central Abilene to Metas data center in El Paso, where the company has contracted with a Houston-based microgrid developer to set up 813 modular generators. The projects are also popping up in rural areas of the country with few other economic development prospects. A developer called BorderPlex is proposing a $165 billion data center campus called Project Jupiter in southern New Mexico, powered by two microgrids that operate on simple-cycle gas turbines, which just burn gas to generate energy without capturing and deploying their waste heat. The projects 2,880 megawatts of generation are more than the entire generation capacity of central New Mexicos main utility. Ive never seen something quite this big before, dollar-wise, scale-wise, said Colin Cox, an attorney with the Center for Biological Diversity, which is opposing the project. To call this a microgrid defies common sense. Remaining behind the meter allows the project to avoid seeking approval from regulators who would enforce compliance with the states climate lawseven though Project Jupiters carbon emissions alone could outweigh the actions that New Mexico has taken to lower emissions over the past several years. The projects developer has promised jobs and tax revenue to rural Doa Ana County, but the future is murky. It remains unclear whether demand for artificial intelligence products will keep up with the historic capital expenditures being made by companies like OpenAI. If the bubble were to pop, the state would be left with a gas turbine that didnt serve any usersan asset that the state would not need and that, under its climate laws, it would not be allowed to use. Theyll just be stranded assets, said Cox. You cant do anything with a gas turbine besides run gas through it to make it spin.
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E-Commerce
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