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Heads of Xbox and Mobile Out at Microsoft

Microsoft has officially announced that Robbie Bach, the head of its Entertainment and Devices division, will be “retiring” from Microsoft this fall. The Entertainment and Devices division is responsible for things like Microsoft’s Xbox business, as well as the Zune and Windows Mobile; in the wake of Bach’s departure the division will effectively be dissolved, with Interactive Entertainment senior VP Don Mattrick and Mobile Communications senior VP Andy Lees taking over the divisions products and services; both will report directly to Microsoft CEO Steve Ballmer.

As part of the shakeup, long-time Microsoft entertainment exec J Allard, currently senior VP of Design and Development for that now-vanishing Entertainment and Devices division, will be leaving the company. Allard had recently been on a leave of absence from Microsoft that rumors had attributed to the cancellation of the Courier tablet project.

“Robbie’s an amazing business person and close personal friend, which makes his departure a point of sadness for me,” said Microsoft CEO Steve Ballmer, in a statment. “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.”

Reports have Allard, a 19-year Microsoft veteran, leaving to pursue personal projects—although industry speculation has him being courted by everything from Apple to Google. Microsoft says Allard will still have an official Microsoft role as a strategic advisor to Steve Ballmer. In 2007, Allard was put in charge of Microsoft’s Zune efforts.

Although Microsoft is one of the most ubiquitous names in the computing industry, the company has had trouble transitioning that success into mobile and entertainment arenas. The Microsoft Zune was supposed to be an “iPod killer,” and while the device has undeniably improved over time, it has yet to gain major market share (and the main thing eroding the iPod market is another Apple product: the iPhone). Microsoft has also yet so see major success in the mobile arena, with Windows Mobile smartphones failing to take hold outside enterprise customers and the forthcoming Windows 7 Phone still an unknown commodity with no native applications or backward compatibility. Microsoft’s biggest success in the consumer space has been the Xbox console gaming ecosystem—the Entertainment and Devices division posted a $165 million profit for its most recent quarter, largely on the basis of Xbox Live revenue. However, Microsoft has yet to recoup the billions it put into building the Xbox business.

Bach and Allard’s departure puts Microsoft CEO Steve Ballmer closer to the company’s gaming and mobile efforts; it remains to be seen whether more direct attention from Microsoft’s CEO will lead to success in the consumer marketplace.