The two leading lights of Microsoft’s Entertainment and Devices division — Robbie Bach and J Allard — are leaving the company, possibly leaving chief executive Steve Ballmer in direct charge of all the company’s fun and games

Robbie Bach is retiring as president of Microsoft’s Entertainment and Devices division, while J Allard is to become a consultant on specific projects. Bach and J Allard are the people mainly responsible for the Xbox games console and Live service, the Zune media player, PC gaming, Microsoft TV, Microsoft Surface, Office for Mac, and Windows Mobile and Windows Phone 7 phones.In the latest financial quarter, the E&D division made an operating profit of $165m on sales worth $1.7bn. The company made $5.2bn on a turnover of $14.5bn.

Bach joined Microsoft in 1988 and often appeared in keynote speeches with Microsoft chief executive Steve Ballmer, who said in a statement: “Robbie’s an amazing business person and close personal friend, which makes his departure a point of sadness for me.” Some had considered Bach a possible future CEO.

Allard, the division’s senior vice president of design and development, is leaving after 19 years at Microsoft. Allard is considered the “father of the Xbox” and his disappearance was noted on 18 May by ZD Net’s Mary Jo Foley, who wrote Where in the world is J Allard? A source told her that “Allard is on sabbatical and is unlikely to return to Microsoft”. However, Allard told TechFlash that his departure was not connected with the cancellation of another of his projects, the dual-screen Courier tablet computer. He said he wanted to devote more time to his personal interests, particularly adventure sports.

Allard was widely admired and the Kotaku games blog has posted a tribute, J Allard, We Will Miss You

Bach is not being replaced, so the mobile phone and Xbox bosses, Andy Lees and Don Mattrick, will report directly to Ballmer. Allard will also report directly to Ballmer on his special projects.

Whatever the reasons for the reorganisation, the division has not generally been successful at selling its major products, or at making money out of them. While Microsoft has done far better than most people expected in establishing the Xbox console line, the Xbox 360 has been dogged by problems with consoles overheating and failing with the famous Red Ring of Death. Microsoft extended the product’s guarantee to cover the issue, taking a $1bn charge for the cost. The division’s successes include the Xbox Live online service and the Halo games franchise.

While Microsoft was relatively quick to enter the smartphone market with touch-screen systems, long before Apple, its Windows Mobile software was clunky by comparison. It has lost market share both to Apple’s iPhone and to systems running Google’s Android software. And while the Zune HD and Zune 4 desktop software have impressed users, the system has not sold well in the US, and has not been launched internationally. It remains to be seen whether the impressive-looking Windows Phone 7 will do any better.

Microsoft has been extremely successful as a platform company, providing software that other companies could use to build their own products, including PCs and phones, applications and both online and offline services. The Entertainment and Devices division embodied Microsoft’s attempt to create proprietary vertically integrated systems including its own hardware, operating system, applications, content and online services. It’s a strategy that Apple has used with tremendous success, but Microsoft has never been able to match it.

Even those who weren’t particularly keen on Bach could struggle to see Ballmer doing the job any better himself. However, since Bach isn’t retiring until the autumn, there’s still time to find a successor.

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Jack Schofield

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It’s actually not quite as exciting as it sounds…

For their respective press events at this week’s Consumer Electronics Show, Microsoft and Sony have emerged from some serious spreadsheet and calculator sessions with a collection of scintillating sales stats.

First up, Microsoft’s Steve Ballmer confirmed that Xbox 360 has now shifted 39m units worldwide since its launch in 2005. This combines nicely with sales figures just released by ELSPA which show that last year, Xbox games overtook Wii titles in terms of UK revenue. As industry news source MCV, reports:

Xbox 360 raked in £459m in sales throughout the period according to numbers from ELSPA, generating more revenue than any other platform. Wii still won in raw unit terms, however, with 18m games sold.

Over at Sony, there were no new total sales figures for PS3, but it was announced that over 3.8 million hardware units were shifted during the five week run up to Christmas – a 76 per cent increase over last year, and a record Xmas performance for the machine.

While we’re on a stat offensive, ELSPA has also announced its 2009 UK games industry sales figures. Total sales of all videogames software during 2009 amounted to £1.621 billion, with revenue on console hardware sales amounting to £1.06 billion. The latter figure represents a slight fall from 2008 (£1.905 billion), which ELSPA puts down to slashed retail prices. And of course, a big bugger of a recession.

Here are the rest of the numerical titbits:

Nintendo Wii stormed the field with software sales of over 18 million units in the UK, retaining the title of Number One software format by units sold. Sony’s PlayStation 3 also saw a dramatic increase by 14 per cent of software units sold, from 10.4 million units in 2008 to 11.9 million units in 2009. Overall, in 2009 UK consumers bought a total of 74.6 million videogame units – which works out at more than one per person in the UK.

However, it was Microsoft’s Xbox 360 which saw the biggest increase in software revenue in 2009, up four per cent from 2008 to earn £459 million and become the number one software format by revenue, overtaking the Nintendo Wii.

The Sony PlayStation 3 was the star console this year, posting a two per cent increase of units sold compared to 2008. However it still could not overtake the Nintendo Wii which retained the lead as the most sold console of 2009. In total, 6.7 million videogame consoles were sold in the UK in 2009, which is one console for every nine people in the UK.

The total value of console/PC gaming peripherals was £630 million in 2009, with total sales reaching 35.8 million units.

As for Wii, Nintendo President Satoru Iwata recently told Reuters that the machine had recovered from its mid-2009 slowdown, with sales topping three million in the US over the festive season.

It will be interesting to see how the consoles vie for sales in 2010. With Microsoft now confirming Natal for a Christmas release and Sony lining up its own motion controller as well as confirming that 3D stereoscopic gaming will be added to the PS3 firmware this year, there’s a serious specifications war still raging.

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Keith Stuart

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