Microsoft Shakes Up Mobile Phone Unit

Microsoft is restructuring its Entertainment and Devices Division (EDD) in a move that will see two key company leaders retire and the entire organization reporting directly to CEO Steve Ballmer.

Leaving in the latest Microsoft (NASDAQ: MSFT) reorg are 22-year veteran Robbie Bach, president of the division, and J Allard, a 19-year Microsoft executive who has most recently been the division's chief experience officer (CXO) and chief technology officer (CTO).

The shakeup comes at a point when, while Microsoft's game franchise is steamrolling most of its competition, its mobile devices group has been slow to respond to lightning-fast market changes and has been largely left out of many of the mobile developments that have reshaped so much of the enterprise mobility landscape.

After years of focusing on mobile business users with its stodgy Windows Mobile operating system, Microsoft in February launched Windows Phone 7, its new OS featuring a multitouch screen and Zune-like features, in a bid to better take on competitors like Apple's (NASDAQ: AAPL) iPhone.

However, Windows Phone 7 isn't due to go on sale before this fall, seemingly an eternity in the fast-moving world of mobile devices. The iPhone, meanwhile, has made steady gains in the workplace, and continues seeing new attention from developers rolling out enterprise-friendly apps.

While Microsoft has also been eying the profits from younger users with its new Kin phones, the company has also said it will continue to enhance its aging, business-oriented Windows Mobile devices. But most, if not all, of them will not be able to run applications written for Windows Phone 7 -- giving the appearance of simply sunsetting an outmoded technology, however.

Those moves leave Microsoft's mobile devices strategy going in multiple directions, while vendors like Apple, BlackBerry maker Research In Motion, and newcomers like Google's Android chew up market share.

The climate for Microsoft in mobile devices continues to worsen in other ways, as well, with at least one high-profile partner indicating its willingness to desert Microsoft's camp. HP recently bought Palm at the end of April to power its upcoming slate device, rather than use Microsoft's software -- a blow to Microsoft after Ballmer had highlighted HP's slate at the Consumer Electronics Show in January.

Mobile executive shuffle

Ballmer is known for putting troubled products and projects directly under his personal control -- as he did with Windows 7 after Windows Vista faced criticism and slow uptake.

Microsoft has also been signaling new interest in getting its mobile business under tighter control for some time. For instance, Allard is rumored to be departing due to the cancellation of one of his pet projects. At the end of April, Microsoft officially killed the folding, double-screen iPad-like device, codenamed Courier, without ever having announced it publicly.

Meanwhile, rising in this week's shakeup is Andy Lees, senior vice president of Microsoft's Mobile Communication Business. His continuing role will leave him in charge of "development, marketing and sales of Microsoft software and services for Windows Phones worldwide, including KIN and Windows Phone 7," according to a Microsoft statement.

Lees, a 20-year senior executive, was promoted to that position in the company's last major reorganization in February 2008.

At the same time, Senior Vice President Don Mattrick will continue to lead the Interactive Entertainment Business (IEB), according to Microsoft's statement. A relative newbie who joined Microsoft in 2007, among other projects, Mattrick heads up Project Natal, Microsoft's breakthrough 3D game controller that relies on a user's body to control on-screen activity. Natal is due out in time for the holiday sales season. He also oversees lucrative game franchises such as the Halo series.

Bach is scheduled to step down in the fall, according to the company's statement. The other management changes take hold on July 1. Allard is also scheduled to depart his official duties in the fall, according to his bio on Microsoft's Web site.

However, according to a memo from Ballmer to the company's employees Tuesday morning, Allard won't be leaving entirely.

"Given his ongoing passion and commitment to Microsoft, he will remain as an advisor to me, helping incubation efforts, looking at design and UI, and providing a cross-company perspective on these and similar topics," Ballmer's memo said.

Stuart J. Johnston is a contributing writer at InternetNews.com, the news service of Internet.com, the network for technology professionals.