Robbie Bach, the Microsoft executive who launched the Xbox, has been pushed out as head of the gaming and mobile devices division after the company fell behind in technology for smartphones.
Microsoft is also axing another executive from the division, the head of design and development, J Allard.
Mr Bach, 48, who has been with the company for 22 years, was promoted to run a new entertainment division in 2005, four years after successfully launching the Xbox gaming console, but responsibility for the division will now be split between executives who will focus either on phones or gaming.
Only 10 per cent of smartphones sold in the US in the first three months of this year run Windows software, according to the retail research firm NPD Group. That is well behind Apple with 21 per cent, Google with 28 per cent and the BlackBerry maker Research in Motion with 36 per cent.
The entertainment and devices division contributes 11 per cent of the company's sales, but makes just 3 per cent of its operating profit. It has also been the scene of some notable disasters, such as the launch of the Zune, a digital music player that failed to meaningfully challenge Apple's iPod.Reuse content