Microsoft on Wednesday revealed a major internal shakeup that will see several key players in its Entertainment & Devices division—responsible for the Xbox, Zune, and Windows Phone brands, among others—leave the company. Most notable among the losses are E&D President Robbie Bach and Senior Vice President J Allard. Bach had been at the company for 22 years and is largely responsible for Microsoft's current lineup of underwhelming consumer offerings. That said, the company is positioning his exit in a positive light.
"For the past 22 years, Robbie has personified creativity, innovation, and drive," Microsoft CEO Steve Ballmer said. "With this spirit, he has led a division passionately devoted to making Microsoft successful in interactive entertainment and mobility. Robbie's an amazing business person and close personal friend, which makes his departure a point of sadness for me. However, given the strong leadership team he has built, the business performance of E&D this year, and the launches of Windows Phone 7 and 'Project Natal' this fall, we are set up well for success as we continue to drive our mobile and entertainment businesses forward."
E&D, of course, has been anything but successful. It sat on Windows Mobile while Apple ran away with the consumer smartphone market and then eventually had to cancel that product, which dated back 15 years, to start again with Windows Phone. It copied the Apple playbook with its Zune MP3 players, which failed dramatically in the marketplace. And even its most successful product, the Xbox 360, is something of a disaster: It will never recoup the billions in R&D investments it incurred, was the subject of the worst-ever consumer electronics recall in history because of rampant reliability issues, and despite being in the market for a year longer than the competition, has been dramatically outsold by the less sophisticated Nintendo Wii. The Project Natal that Ballmer mentioned above is in fact just a belated response to the Wii's most innovative feature: motion control.
In a letter to his employees this week, Bach took the high road, describing the next generation of E&D products as Act II. "We are now winning reviews, critical acclaim, and consumer love," he claimed. "And we are ready to embark on the next generation of products and the next wave of inventions over the next 3-5 years."
Bach also explained the organizational changes that will occur as he slowly exits the company later this year. Starting July 1, Senior Vice President Don Mattrick, who oversees Microsoft's Interactive Entertainment Business, and Senior Vice President Andy Lees, who leads the Mobile Communications Business, will begin reporting directly to Ballmer.
J Allard, who has been with Microsoft for 19 years and also has had a hand in all of E&D's offerings, will leave the company but "take an official role as an advisor in a strategic role for Ballmer and his leadership team."
With due respect to Bach and Allard, it's pretty clear a change was necessary. Hopefully, Mr. Ballmer won't try to continue micromanaging E&D but will instead transition the division to a leader and team that actually understand the consumer market. This has been a glaring problem for far too long, and it's nice to see something finally happening there.