Time to rearrange Microsoft, let in light

Robbie Bach ran the hippest business at Microsoft.

Not just because his lieutenants wore jeans and hoodies instead of khakis and polo shirts.

The Entertainment and Devices division is where Microsoft blends software with art and culture to create marvelous things — physical products used for fun and pleasure.

Xbox dominates the group and produced most of its $1.7 billion in sales in the most recent quarter.

But hidden beneath the rich green foliage of the Xbox business are islands of misfit toys — media gadgets and ventures struggling to find loving homes.

The late spring cleaning Chief Executive Steve Ballmer is doing is an opportunity to shine more light on these smaller businesses.

Maybe Ballmer ought to split the business apart, instead of just shuffling executives around. That may be where he's heading, with the appointment of Bach's successors — one executive to lead the games business and another to lead the mobile-device business.

It echoes a 2006 reorganization of the Windows group, which had grown unwieldy under another retiring old lion, Jim Allchin, who was building online services while trying to get Vista sorted out.

Bach also had an impossible job.

As his empire grew, adding phones and media software in addition to games, hardware, media players and services, he was simultaneously battling Apple, Sony, Nintendo and Google. Not to mention Amazon.com, TiVo and many others.

It didn't help that Bill Gates retired and Bach lost the biggest champion of Microsoft's long and costly push into the consumer-entertainment business.

Struggles against the iPhone have drawn the most attention, but I wonder if the coup de grace came last week when Google triumphantly announced that Intel and Sony would use its fledgling TV-software platform.

Microsoft spent more than $10 billion and nearly two decades trying to become a player in the TV business, an effort Bach is going to focus on until he leaves this fall.

Meanwhile it's impossible to know exactly what Bach's been up to, because of the way his group reports financial performance.

The group doesn't break out performance of its individual businesses, so investors can't tell how much is being made or lost on phones, Zunes, TV software and PC peripherals.

Massive cash flow from the Xbox provides a sort of accounting cover for the other ventures.

Microsoft used to break out the performance of its phone business. That ended after a 2005 restructuring that folded seven business units into three giant groups.

Phones and Xbox were then put under the same roof, as were MSN and Windows.

At the time, Ballmer said the move was about "having great leaders who can drive agile innovation and agile decision-making."

In retrospect, he may have been asking too much of too few people.

It also left investors with less information about Microsoft's mobile business.

Now that we know mobile devices are key to the future of computing and Microsoft, it's time for more transparency as well as a new organizational structure.

Reach Brier Dudley at 206-515-5687 or bdudley@seattletimes.com.