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What’s Next For Microsoft In E&D?

Microsoft’s surprise announcement this morning that Robbie Bach, who had led the company’s entertainment and devices unit since it was started, was retiring and that CEO Steve Ballmer would have more direct oversight of Microsoft’s gaming and mobile properties, has raised lots of speculation about what led to the re-organization. Here are the most important questions we’re tracking, along with some answers:

Was Bach fired? Microsoft (NSDQ: MSFT) insists Bach was not forced out and instead is retiring; Bach also tells TechFlash in an interview that it’s a “pure coincidence” that he decided to move on at the same time as E&D CTO J Allard. But considering the division’s recent travails and that Ballmer himself will now take direct control over Microsoft’s mobile and gaming efforts, it doesn’t seem too far-fetched to think Ballmer may have pushed Bach out or at least didn’t put up much of a fight when Bach told him he was going to leave. If so, that suggests — ominously — that Ballmer may not have had much confidence in some of E&D’s recent and upcoming product launches, including the Kin phone for teens and the forthcoming Windows Phone 7 operating system.

Is Ballmer the right person to lead mobile and gaming? GigaOm posed the question earlier today and noted that Ballmer hasn’t exactly been prescient in his predictions about the future of the mobile market (He famously downplayed the iPhone’s prospects). And considering the enormous competitive pressure both Microsoft’s gaming and mobile businesses face, it seemingly would make more sense to have a dedicated leader; i.e. a successor to Bach.

Then again, Ballmer did directly oversee Microsoft’s online services division after Kevin Johnson left two years ago. He later handed the group off to Qi Lu and it’s been in comeback mode since.

What role did Microsoft’s tablet plans play in the re-org? Also just a “pure coincidence”? A month ago, Microsoft finally confirmed that its E&D unit had in fact been secretly developing a tablet — but also said it was cutting the product. The tablet effort was led by Allard and Ballmer himself is said to have made the decision to kill it. Alley Insider asks whether that move contributed to the decision by both men to leave — an especially reasonable question, considering that Microsoft is looking emptier and emptier by the day in the tablet category.

What will Allard do for Ballmer? Allard will now serve as an “advisor in a strategic role for Ballmer.” In an e-mail to staff, published by Mary Jo Foley, Allard provides some more color, saying he’ll dedicate about five percent of his overall time “on a couple of projects beginning this fall

One Response to “What’s Next For Microsoft In E&D?”

  1. marv08

    “Five percent isn’t a lot (one working day a week) but…”

    Gee, I hope you are not in accounting ;-)

    The balance of the E&D division is a disaster. The Xbox is doing fine now, but overall it sunk billions. They missed the boat in mobile, Windows Phone 7 is three years late to make any impact, KIN is a joke (not even the biggest MS fan sites have been making any comments on sales figures), the Zune HD is a nice device, but not “better enough” to unseat the king, they have 7 mobile OSs now (Windows 7, Phone 7, Mobile 6.x, CE, Danger/Sidekick, KIN, Zune), and not one of them is fit for a tablet. They have one of the largest R&D budgets in the history of mankind and there is no output. A clear confession of failure.

    The stock is losing value faster than any other relevant tech company (so far 14.5% in 2010) and there is not one single innovation on the horizon (remember that Office and Windows are always priced in). They have to shuffle some heads before the shareholders demand it. If Ballmer does not act, he will be in the hot seat. Of course he is not suitable to run this division. His vicious tactics of having internal units compete in developing the same thing are a huge part of the problem.