MS Shakes Up Entertainment Division
More changes are in store for Redmond as Microsoft plans to reorganize its entertainment division into four smaller groups to make it more competitive. Details of the split leaked out via an internal memo sent this week by Robbie Bach, head of Microsoft's Entertainment and Devices Division.
Bach would control MSN Music after the split, and the group that handles relations with the entertainment industry -- previously under the Windows group -- would now be under his jurisdiction.
Bryan Lee, now vice president and chief financial officer of the Home Entertainment Group, will control the entertainment division, which would be tasked with the company's digital music, television and video offerings.
Peter Moore, corporate vice president of worldwide marketing for Xbox, will now manage the interactive entertainment division, which would include Xbox and Microsoft's PC gaming business.
Two divisions would remain as they are today. Tom Gibbons would remain head of the consumer software and devices division, and Pieter Knook would continue to run the mobile business.
Vice president Peter Allard would also take on more responsibility, coordinating activities between the four groups.
"The market is rife with new opportunities," Bach told employees in the memo. "Yet we face a strong group of competitors."
The moves follow a major reorganization of Microsoft in September. But while those changes seemed more of a reaction to moves by competitor Google, the new reorg seems primarily focused on strengthening the company's offerings in the digital entertainment business.
"While it could mean any number of things over time, the first take is Microsoft is finally getting serious about where it stands in the market with digital entertainment, especially music and video," commented Jupiter Research vice president Michael Gartenberg. "Not sure if Bryan is personally the music czar I've called for in the past or if that's a role he's tasked to fill but either way, it's clear there's a place in Redmond where the buck stops for this stuff."
Microsoft's entertainment offerings have not performed as well as other products from the company.
It's Windows Media format, while quickly becoming a desktop stalwart, has come in second to Apple and its FairPlay-based AAC solution due to the popularity of the iPod and iTunes. The Xbox is by no means a market leader; competitor Sony has sold almost five times the number of consoles as Microsoft.
Clearly, these problems are on Bach's mind as he proceeds with the next phase of Microsoft's reorganization. "I will spend more time thinking about our broader challenges and opportunities across the division," he wrote in the memo.