Microsoft Reorganization and the Future of Xbox

Microsoft today announced a long-awaited reorganization that is aimed at eliminating¬†the¬†company’s often warring business units in favor of a more unified, collaborative organization. Kara Swisher at All Things D had the details first and has reported them in great depth, so I’m not going to go over that ground. But I do want to speculate a bit on what the new arrangement means for the Xbox, the one product that has generated any real excitement out of Redmond in the past few years.

On the one hand, putting Xbox in a consolidated hardware unit, under former Windows engineering chief Julie Larsen-Green, shows how mainstream and central to Microsoft’s ambitions the Xbox has become. On the other, it marks the formal end of Xbox as a rebel within the Microsoft camp.

Xbox was the product of a Microsoft skunkworks run by J. Allard and Robbie Bach. It was based in Redmond, Wash., like the rest of the company, but was physically located in offices and labs a few miles away fromt the main Microsoft campus. At least in its early days, it felt very different, and much less corporate, than other Microsoft operations. The team produced the original Xbox, the Xbox 360, and the revolutionary Kinect sensor.

To be sure, a lot of what made the Xbox unit special ended when Allard and Bach left the company in 2010 and Xbox got reeled in closer to the mother ship. Don Mattrick, who took over for Bach as head of the unit, ¬†announced recently he was leaving Microsoft to become CEO of game maker Zynga. After today’s reorganization, it’s official that Xbox is just another product in the Microsoft family.