Windows Phone chief and Xbox brain exit Microsoft

If there's a job more thankless than leading Microsoft's perpetually loss-making online business operations, it's running the Redmond unit that handles Windows Mobile and Xbox.

When consumer gadgets were flying off the shelves last Christmas, Microsoft's Entertainment and Devices unit actually saw sales drop — by 10 per cent.

The group's phone OS has been losing market share to Google and Apple. Windows Mobile fell four per centage points to 15.7 per cent of the US smartphone market between October 2009 and January 2010, while Android climbed 4.3 per centage points to 7.1 per cent and Apple's iPhone held steady at a quarter of the market.

Having repeatedly downplayed these problems, E&D president Robbie Bach is now quitting after 22 years with Microsoft, and chief executive Steve Ballmer is taking control of E&D. Senior vice president Don Mattrick stays in charge of the Interactive Entertainment Business (which handles Xbox and planned Wii-wannabe Project Natal), with senior vice president Andy Lees remaining in charge of mobile (Windows Phone), and both report to Ballmer.

No actual reason was given for Bach's exit, with Bach apparently retiring from the company.

If history is any teacher, Mattrick or Lees will be promoted to the head of E&D — unless the group is re-orged out of existence.

Re-org is one of Microsoft's favorite past times, and the summer is high season for such activities. Earlier this year, insiders said that Windows Phone 7 would be lopped from E&D and folded into the main Windows and Windows Live Group under Windows 7 rising star and Ballmer favorite Steven Sinofsky.

Sinofsky had rather helpfully pointed to Bach's "continued failure in the mobile space" during Microsoft's annual December strategy review, according to insiders.

Also following Bach out, after 19 years, is the brain behind the Xbox console: senior vice president of design and development J Allard. Allard will remain as an advisor to Ballmer, helping incubate new ideas and working on design and UI, Ballmer said.

Allard managed the technical development of the Xbox, now a best-selling franchise that took Microsoft into the hardware business. Recently, Allard managed development of the Zune media player. Allard also championed Microsoft's planned dual-screen tablet competitor to the iPad, which has been scrapped by the company. ®