Confirming reports circulating for several days, Microsoft announced a substantial plan to reorganize its Entertainment and Devices division. Timed to coincide with the fall departure of retiring group head Robbie Back, Microsoft CEO Steve Ballmer will take over the division starting July 1.
The heads of the company’s Xbox, mobile software and music businesses will all report to Ballmer.
The change comes on the heels of Microsoft’s continued stumbles in the mobile software market. In the first quarter, the company’s market share dropped to 6.8% (global). During the same period, Google’s Android platform and Apple’s iPhone OS saw their shares increase.
It’s a similar story to what’s played out in the music business. Despite early research and market entry, Microsoft failed to offer the best user experience or capture the kind of mind-share (and market share) of its competition. Today, according to NPD data, the Zune accounts for only about 1.4% of the MP3 player market compared to the iPods 76% stake.
A lack of single-minded attention to the group is probably a partial explanation. Microsoft was focused on its core Windows business, search, and even distracted with its attempt to buy Yahoo, all while competitors were building out their devices businesses at a higher priority.
At 11% of revenue, E/D has been an important part of Microsoft’s product platform but maybe not important enough. Ballmer’s direct leadership is a clear sign of the company’s rethinking that.
In 2008, Ballmer similarly took the helm of the Windows business to help chaperon the delivery of the much improved (and much needed) Windows 7. In the coming year we’ll see if he can get the entertainment/devices business refocused in a similar manner.