It is pretty clear that things still aren't going particularly well within Microsoft's entertainment and devices group. This group contains the X-Box, Zune and Windows Phone product groups. While X-Box itself is doing well, retaining a respectable second place in the gaming console wars, Windows Mobile hasn't fared so well and Zune continues to be an afterthought in the portable music player world.Robbie Bach has headed the entertainment and devices group in recent years and is credited with coming up with a successful business model for the X-Box, which includes the X-Box Live services. Bach announced he is retiring from the company this fall. The Windows Mobile side of the business though has been kicked around by Apple and more recently, Android, as both focused on a segment of the business Windows Mobile largely ignored, the consumer. WinMo has always been about the enterprise customer and saw the Blackberry as its main competitor. According to the Wall Street Journal, Steve Ballmer threw out whatever the Windows Mobile team was working on and made the group essentially start over in a quest to regain some of the share that Apple has taken.

J Allard has also been involved in the group as chief experience officer and chief technology officer. He is leaving and according to inside sources at Microsoft, it is because the Courier tablet was canceled. Gizmodo has his farewell letter to his team.

As a result of the changes, Ballmer will take direct control of the group to bring Windows Phone 7 into the world this fall. The new heads of the X-Box and Windows Phone groups will report to him effective July 1. If history is any guide, Ballmer took similar control over the Windows group in 2008 and has Windows 7 to show for it. Given that Windows Phone 7 will be shipping this fall, Ballmer won't be able to change much, if anything, on the OS design, but could still directly affect the marketing of WP7, the Zune music store experience that WP7 users will have and the Windows Marketplace for Mobile store before devices hit the streets. He'll be able to have more influence over the updates to WP7 (which hopefully include copy/paste functionality as soon as possible) as well as the next major release.

Long a fan of developers, developers, developers, I do wonder if he'll reverse course on the banning of native code apps from WP7 that has caused some companies to shun the platform, at least initially?

Is it a case of too little too late? No one can know for sure. What you can be sure of though is if Ballmer is taking direct control, Microsoft views the group as a critical part of its future, and anyone would be mistaken to dismiss a Microsoft recovery in this area. Their recovery from the Vista debacle with Windows 7 should be proof enough of that.