The news of the departures of J Allard and Robbie Bach from Microsoft's Entertainment and Devices division has been met with a remarkable breadth of opinion. Bach and Allard were both instrumental in the development and marketing of the Xbox console.

Bach led Microsoft's Home and Entertainment Group, which encompassed the Xbox, Games for Windows, and Microsoft's consumer-oriented hardware and software products. In 2005, he was made president of the newly formed Entertainment & Devices (E&D) division, which spans four areas: the Interactive Entertainment Business, responsible for Xbox, Xbox 360, Games for Windows, Zune, and Windows Media Center; the Media Platforms Business, which includes MediaRoom and PlayReady; the Mobile Communications Business, covering Windows Mobile/Windows Phone, Kin, and related software and services; and the Specialized Devices & Applications Business, which covers Microsoft Hardware, Surface, Office for Mac, and Windows Embedded.

Allard worked on Xbox, undergoing a remarkable change in image from chubby nerd to laid-back, trendy, all-around cool guy. After Xbox, he worked on Zune and the recently released Kin. He was also involved in the fascinating Courier project, terminated last month. Way back in the 1990s, J Allard was the person who made Microsoft realize the importance of the Web and the Internet, in a memo that brought about a remarkably swift change in direction for the software giant.

Both men claim that their near-simultaneous resignations are coincidental. Bach says that he's retiring, more interested in improving his handicap than continuing to work. Allard says that he wants to pursue his sporting ambitions. Unlike Bach, Allard says that he's going to continue to work with Microsoft, advising CEO Steve Ballmer on a number of unspecified projects in the future—in contrast to the past, which he described as 95% Microsoft, 5% life, he wants it to be 5% Microsoft, 95% life.

There has been recent speculation that J Allard was leaving Microsoft as a result of dissatisfaction over the Courier project. However, with both being Microsoft veterans (22 years for Robbie Bach, 19 for J Allard), and both men having no real need to work for a living anymore, it's just as plausible that they're leaving for all the reasons they've publicly stated.

Get out while you can still save your rep?

All this money has only gotten Microsoft to second place in the market; both the Xbox 360 and the PlayStation 3 lag far behind Nintendo's Wii.

Being more cynical, one might be a little surprised that Robbie should choose to retire just as two major E&D products—Natal and Windows Phone 7—are due to hit the market. As a rule, people don't tend to abandon ship shortly before two of the biggest product launches that their division has made for five years unless they want to distance themselves from those products as soon as they can.

As a result of the twin departures, the Entertainment and Devices division is being reorganized. Neither man is leaving the company immediately. Robbie Bach will depart some time in the fall, and J Allard after a few months, to ensure a smooth hand-over. Robbie Bach will not be replaced, or at least not immediately. Instead, Don Mattrick, vice president of Interactive Entertainment Business, and Andy Lees, vice president of Mobile Communication Business, will report directly to Steve Ballmer, effective July 1st.

Office for Mac is being moved to Microsoft's Business Division (where Windows Office resides). The remainder of the Specialized Devices & Applications Business will continue to operate under Bach, with no plan yet confirmed for what happens after that. Beyond E&D, a number of other bodies are being shuffled around. But the major impact is in E&D.

The reactions range from "it's about time" to "this is disastrous." A key reason for the different viewpoints is perception of E&D's performance, especially Xbox's. Has Xbox successfully established Microsoft as a player in the living room (if that was even a worthwhile endeavor, which is far from clear), or has it been a hugely expensive misadventure?

Evaluating E&D

Microsoft's consumer electronics track record is poor. The original Xbox worked well enough, but lost money hand-over-fist—a consequence of being put together in a hurry, using what were essentially commodity PC parts. The Xbox 360 has started making money after several years of substantial losses (exacerbated by chronic unreliability issues), but even this modest success is arguably as much to do with Sony's dubious managerial decisions as it is to any particular quality of the Xbox 360. Hoping for your competitor to fail isn't a business model.

And all this money has only gotten Microsoft to second place in the market; both the Xbox 360 and the PlayStation 3 lag far behind Nintendo's Wii. Even that second place is not assured; Microsoft beat Sony to market by some months, and attained a sizable sales lead, but Sony is slowly beginning to fight back and diminish that advantage.

On the other hand,the Xbox 360 has some tricks up its sleeve. Project Natal, due later this year, will bring radically new interaction options to the console by doing away with traditional controllers; it's hoped that this will rejuvenate the console and give its sales a healthy boost.

A case can be made, then, that the Xbox has been a success; with it, Microsoft has established a strong presence in the living room, with a product that's remarkably popular (even in spite of its appalling reliability record), and the days of massive losses should be in the past, at least until Xbox 4π is announced.

The success of E&D's other products—or rather, the lack thereof—is much less contentious.

The Zune was a derivative, "me-too" product, whose major differentiating feature—Wi-Fi—was crippled to the point of uselessness and lumbered with cringe-worthy branding ("squirt"), to boot. Though its successor, the Zune HD, is a delightful piece of hardware, it too has languished in obscurity—a hamstrung third-party development environment coupled with a complete lack of international availability and weak promotion meant it had no chance of ever competing with the iPod touch.

The frustrating part of the Zune HD is that it really is a good media player. The Zune software is also attractive and pleasant to use (if not as fully featured as one would like). But it took too long to arrive; Microsoft's initial forays into the media player market, with the ill-fated PlaysForSure scheme and then the original Zune, allowed the iPod and iTunes to become so firmly entrenched that Redmond had virtually no chance of displacing them. It simply took Microsoft too long to realize that the only way to be effective in these consumer electronics markets was to build the whole widget.

And even that lesson wasn't learned properly.