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Microsoft Cuts More Ties To Mobile Status Quo

Microsoft's re-org of the Entertainment and Devices division is another examples of the lengths to which the company is willing to go to find a new mobile strategy that works.

Tuesday's revelation that two key executives from Microsoft's Entertainment and Devices division, which oversees the software giant's mobile business, are leaving the company is a prime example. It's a similar kind of guillotine-like split from the past Microsoft made when it ditched Windows Mobile earlier this year and made Silverlight the platform for building native applications in Windows Phone 7.

Re-orgs are as commonplace in tech companies as donuts on Fridays. But what’s notable about the departure of 22-year Microsoft veteran Robbie Bach, who has headed E&D since the division was formed in 2005, is that Microsoft isn't planning on replacing him, at least not right away.

Bach's duties will be handled by Don Mattrick, senior vice president and head of the Interactive Entertainment Business, and Andy Lees, senior vice president and head of the Mobile Communications Business

Also leaving is J Allard, a 19-year Microsoft veteran and senior vice president of Design and Development for E&D, who’s often credited with driving product direction for the Xbox.

It may be that Microsoft CEO Steve Ballmer is just frustrated with the Windows Phone state of affairs and wants more direct control over the business. Still, it's an alarming move for a business unit that's gearing up for two major product launches slated to arrive in time for the holiday season: Windows Phone 7 and Project Natal.

Windows Phone 7, in many ways, represents Microsoft's mobile "reset," so perhaps it makes sense for the leadership that brought development of the OS to this point to undergo a similar reset. Julie De Jong, an Atlanta-based Windows Mobile MVP, says she wasn't entirely surprised by the E&D re-org and says it places even greater emphasis on Windows Phone 7.

"This seems to support my impression that Microsoft is counting on Windows Phone 7 to lead the charge in terms of Windows Mobile, Zune and Xbox," De Jong said.

By making Silverlight the development platform for Windows Phone 7, Microsoft is creating difficulty for ISVs because they'll have to go back and re-write their Windows Mobile apps for the new platform. Some, like Mozilla, have already decided they don't want to do that. Microsoft's stance is that Silverlight offers a better path to the future, and it may well have a similar rationale for the E&D re-org.

But even if Windows Phone is a success, Microsoft still faces plenty of uncertainty about its tablet strategy. Prior to Ballmer's keynote at CES in January, rumors crackled about Microsoft teaming up with HP on a Windows 7 powered tablet. Ballmer did give a brief demo of the HP Slate, but the product hasn't been seen since HP bought Palm last month, and has reportedly been scuttled.

Allard was driving Microsoft's Courier dual-screen tablet project and, according to some reports at least, was frustrated when Microsoft decided to shelve the project last month. In the wake of the E&D re-org, Microsoft's may be hitting the reset button on tablets as well, which may be good for the eventual product itself but would also delay Microsoft's entry to this emerging space.

Microsoft has been experimenting with various strategies for resuscitating its mobile fortunes, none of which have had any appreciable impact on Windows Mobile's market share. But the E&D shakeup shows that Microsoft hasn't run out of potential avenues to explore as its seeks to right the ship.

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