Microsoft to overhaul mobile division

Microsoft is set to overhaul the management of its mobile, videogames and other consumer devices division.

Microsoft to overhaul mobile division

J Allard, the unit’s chief technology officer – a 15-year Microsoft veteran who led the development of the Xbox game system and Zune music player – is expected to leave following the company’s recent decision to shelve an experimental tablet computer called the Courier, which Allard was spearheading.

The reorganisation will be broader than Allard’s departure, according to a report in the Wall Street Journal. That could mean a change of role for Robbie Bach, who has led the entertainment and devices unit since its creation in 2005. Bach, a 22-year Microsoft veteran, was responsible for the original launch of Xbox in 2001.

The company may announce the changes in its entertainment and devices division as early as this week. Microsoft declined comment.

A management shake-up would come just before Microsoft unveils its new hands-free system for the Xbox – code-named Natal – at the E3 gaming conference in mid-June.

Losing business

Entertainment and devices is the fourth biggest of Microsoft’s five operating units – behind its Windows, Office and server units – and is on track to post more than $8 billion in revenue this fiscal year, which ends 30 June. Last quarter, it contributed 11% of Microsoft’s overall sales and 3% of its operating profit.

The unit developed the highly successful Xbox game system, but has so far failed to make an impact with its Zune digital music player and is losing ground in mobile and smartphones.

Only about 10% of smartphones sold in the first three months of this year in the US run Windows software, according to retail research firm NPD Group. That is well behind Apple with 21%, Google with 28% and BlackBerry-maker Research in Motion with 36%.

Worldwide, Google’s Android passed Microsoft’s Windows as the fourth most popular smartphone operating system in the first quarter, according to research firm Gartner, behind Apple, RIM and Nokia’s Symbian.

Recognising its problems, Microsoft announced a completely new mobile OS earlier this year, called Windows Phone 7, which is scheduled to hit the market in a new range of handsets for this Christmas.

Microsoft needs to regain momentum in the mobile computing sector as Apple’s iPad and a host of competing slate or tablet devices are poised to reshape the industry.

The company may have lost an important ally in the emerging tablet market with HP’s recent deal to buy smartphone pioneer Palm, signaling that HP is planning to use Palm’s operating system instead of Microsoft’s Windows in its forthcoming slate devices.

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