Microsoft Shakes Up Consumer Products Unit - NYTimes.com

Microsoft Shakes Up Consumer Products Unit - NYTimes.com: "Microsoft Shakes Up Its Consumer Products Unit
By ASHLEE VANCE
Published: May 25, 2010

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It’s game time for Steven A. Ballmer, Microsoft’s chief executive.
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JB Reed/Bloomberg News

Robbie Bach, head of the entertainment and devices group, will retire from Microsoft.
Jeff Holt/Bloomberg News

The departure of Robbie Bach will give the chief, Steven Ballmer, a more hands-on role in gadgets and games.

Microsoft disclosed a series of management changes on Tuesday that will alter the shape of its business unit responsible for products like the Zune music player, Xbox gaming console and phones.

Most notably, Robbie Bach, the head of the entertainment and devices group, will retire from Microsoft after 22 years at the company. As a result, Mr. Ballmer will take a more hands-on role in Microsoft’s gadgets and games by having various division heads report directly to him.

In a statement and in discussions with reporters, Microsoft representatives stressed that Mr. Bach would leave the company on good terms.

Mr. Bach’s division has had a number of successes, including the Xbox, but has also produced some of the company’s greatest disappointments, including lackluster phone software and the slow-selling Zune. It also botched its approach to the tablet computer market.

“For the past 22 years, Robbie has personified creativity, innovation and drive,” Mr. Ballmer said in a statement. “With this spirit, he has led a division passionately devoted to making Microsoft successful in interactive entertainment and mobility.”

Mr. Bach, 48, will remain at Microsoft until the fall, at which point he plans to spend more time with his family, Microsoft said. During a meeting with reporters and editors at The New York Times on May 14, Mr. Bach did not mention any plans to leave the company, instead focusing on the future of the Xbox and new phone software.

J Allard, the head of design and development in Mr. Bach’s group, will also leave Microsoft after 19 years at the company, although he will continue to advise Mr. Ballmer, the company said. Mr. Allard has worked on a variety of products, including Windows, Xbox and Zune.

Microsoft recently scrapped a project code-named Courier that included a new type of tablet computer that would have competed against Apple’s iPad. Mr. Allard had backed the product internally.

Microsoft’s entertainment and devices group, which competes against Apple, Sony, Nokia, Google and others, has failed to turn into the large profit center that the company envisioned.

“They certainly expect to be one of the top two companies in market share in the areas where they play,” said Charles Golvin, an analyst with Forrester Research. “With the exception of Xbox, they have failed to achieve that with any of the components in Robbie’s organization.”

Some of the recent shifts in the computing industry have dealt particularly hard blows to Mr. Bach’s group.

For example, Microsoft spent years working on tablet computers, only to watch as Apple’s iPad took over the market in a matter of weeks. In addition, Hewlett-Packard, one of Microsoft’s closest partners, just moved to acquire Palm, a maker of mobile device software. This deal sent a clear signal that H.P. thought it could no longer bet on Microsoft’s Windows software in the mobile market, analysts said.

Roger Kay, president of Endpoint Technologies Associates, said he questioned Mr. Ballmer’s ability to correct some of these problems by embracing a more direct role in overseeing the products.

Microsoft continues to lack what Mr. Kay described as a “maestro” who is capable of reading the tastes of the consumer device market and moving the company quickly enough to take advantage of that intuition.

“I think that is a very special thing that Apple has, and that Microsoft doesn’t,” Mr. Kay said.


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