Microsoft’s Bach Leaves as Head of Games, Mobile (Update2)

Microsoft Corp. said Robbie Bach will retire as head of the division that runs the company’s Xbox game and mobile-devices businesses.

J Allard, senior vice president of design and development in the division, is also leaving, Microsoft, the world’s largest software company, said today in a statement. Senior Vice President Don Mattrick will continue to run the Xbox business and Senior Vice President Andy Lees will head the mobile unit.

The entertainment and devices business accounted for about 13 percent of Microsoft’s $58.4 billion in fiscal 2009 revenue. Xbox 360’s global sales of 40 million units rank second to Nintendo Co.’s Wii, while the company has trailed Apple Inc. and Google Inc. in mobile market share. Mattrick and Lees will report to Steve Ballmer, Microsoft’s chief executive officer.

“The mobile situation has not been good,” said Matt Rosoff, an analyst at Directions on Microsoft. The unit “has been a big area of investment” for Redmond, Washington-based Microsoft as it tries to expand beyond the core Windows and Office products.

Bach, 48, said in the statement he wanted to dedicate more time to his family and nonprofit work including the Boys & Girls Clubs of America. A successor wasn’t named. Sales in the division fell 4.8 percent last year as video-game industry revenue declined.

Microsoft’s share of mobile operating systems fell to 7.9 percent of the worldwide market in the fourth quarter from 12.5 percent a year earlier, according to ABI Research, based in Oyster Bay, New York. The company has also struggled to gain market share for the Zune music player against Apple’s market- leading iPod.

New Game Products

Bach’s departure comes ahead of this year’s release of a new motion-activated game device called Natal and the Windows Phone 7 operating system for mobile devices.

Bobby Kotick, chief executive officer of Activision Blizzard Inc., the world’s biggest game publisher, credited Bach with being “willing to take on business challenges and go after opportunities that are risky.”

“It would have been very easy to say, ‘I’m not going to do Zune. I’m not taking on Steve Jobs and the iPod,’” Kotick said in an interview last week.

Natal will let game players control action by moving their arms and legs rather than holding a controller. Further details of the product, scheduled to be introduced this year, will be given at the annual E3 game conference in June in Los Angeles.

Game Experience

Allard, 41, will remain an adviser to Ballmer, the company said. Lees has led the mobile communications business since 2008, Microsoft said.

Mattrick, 46, was an executive at Electronic Arts Inc. before joining Microsoft in 2007 and has helped Bach develop Xbox Live, the online game portal with more than 23 million members. Xbox Live, which lets gamers play with one another, has helped differentiate Xbox from other systems, said Kotick.

Microsoft retreated 54 cents to $25.73 at 2:23 p.m. New York time in Nasdaq Stock Market trading. The shares had fallen 14 percent before today.

--With assistance from Peter Burrows in San Francisco. Editors: Rob Golum, Cécile Daurat

To contact the reporter on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net;

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net.

This news is from Bloomberg