Microsoft Entertainment Division Shook Up

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Microsoft’s entertainment division has seen a shakeup, as senior executives Robbie Bach and J Allard, both of whom were heavily involved in the development of the Xbox, are leaving the company. Bach is taking retirement and J Allard is leaving to pursue other interests (like off road truck racing), but rumors are already circulating that both were shown the door because of the entertainment division’s inability to compete with Apple and Google in mobile phones and MP3 players.

Microsoft’s entertainment division was formed in 2005. The Xbox was started from nothing by Microsoft and currently hold a solid place in the North American video game market. Microsoft’s Zune MP3 player has been less successful (although the Zune HD isn’t half bad – really). Microsoft’s Windows Mobile has been terrible for years. Rumor has it that Steve Ballmer, who’s known for his strong corporate competitive streak, reportedly axed Allard and Bach because of their inability to compete with Apple and Google with Zune and Windows Mobile (now Windows Phone).

Overall, the entertainment division is a good example of Microsoft these days. They make piles of money on Windows and Office, and then hemorrhage it away on divisions like the Zune and Bing. Department heads in Microsoft’s entertainment division will now report directly to CEO Steve Ballmer.

Apple’s market cap (the complete value of the company, as judged by their stock price) is just $5 billion below Microsoft’s these days, with it being anticipated that Apple will overtake Microsoft any day now. With Ballmer now in direct control of the Xbox, Zune and Windows Phone programs (for now), it’ll be interesting to see if we see any changes in those products.