Microsoft says it has already begun working to fix its problems. Last year, among other measures, it started a unified branding program to help communicate to consumers that more than 50 devices support Microsoft's main digital music technologies and can work with music services without adding new software. But Mr. Ballmer, speaking about the digital music strategy in a recent interview, conceded, "I do think that we should have pushed -- could have pushed -- harder on our device integration sooner." He added, "We won't make that mistake again."
The Xbox group under Mr. Bach is one of the few in Microsoft that hasn't used the ecosystem approach. Instead, it autocratically puts software and hardware together under a single brand. The group has to work with outside game makers, but Mr. Bach has retained control of the Xbox design, partnerships, manufacturing, marketing and brand creation. While the Xbox has been a money loser, it has been a popular success with a widely recognized name brand. Some people at the company say they view the Xbox as the closest thing Microsoft has to an iPod.
Mr. Bach's ascension may have begun at a March executive retreat, where his team showed off the new Xbox 360 game machine. The team walked Mr. Ballmer through the process they used to design, build and market it, people familiar with the retreat say. Later, executives talked about how they might employ lessons learned from Mr. Bach's group. The retreat included a brief analysis of rival Apple's music strategy. After the retreat, Mr. Ballmer sent a memo to top executives assigning Mr. Bach to the music role, the people say.
