Microsoft on Tuesday announced it is replacing top executives at its gaming and mobile devices division, which has stumbled in the smartphone and tablet computer markets.

The company announced that Robbie Bach, president of the Entertainment and Devices (E&D) Division, will retire from the company this fall.

The company also announced that Senior Vice President Don Mattrick will continue to lead the Interactive Entertainment Business and Senior Vice President Andy Lees will continue to lead the Mobile Communications Business. Each will report directly to CEO Steve Ballmer effective July 1.

"Robbie?s an amazing business person and close personal friend, which makes his departure a point of sadness for me. However, given the strong leadership team he has built, the business performance of E&D this year and the launches of Windows Phone 7 and 'Project Natal' this fall, we are set up well for success as we continue to drive our mobile and entertainment businesses forward," Steve Ballmer said.

Don Attrick has led the Interactive Entertainment Business since July 2007, overseeing the evolution of Xbox Live, the launch of blockbusters such as "Halo 3" and the much-anticipated "Project Natal." Previously, Mattrick served as president of Electronic Arts Worldwide Studios.

Microsoft also announced that David Treadwell, corporate vice president of Live Platform Services, will take a new position leading the core technology organization for the Interactive Entertainment Business, reporting to Mattrick.

Lees has led the Mobile Communications Business since February 2008 and has been instrumental in reinvigorating Microsoft?s mobility efforts, bringing in new business and overseeing the creation of both KIN and Windows Phone 7.

Microsoft also announced that J Allard, senior vice president of Design and Development for E&D, will be leaving Microsoft after 19 years, and will take an official role as an advisor in a strategic role for Ballmer and his leadership team.

In other organization moves, following the launch of Office 2010, Antoine Leblond, senior vice president in the Office Productivity Applications Group, will take a new role as senior vice president for the Windows Web Services team. Kurt DelBene, senior vice president in the Office Business Productivity Group, will take on all of the engineering responsibilities for the Office business.

Microsoft's videogame business has been doing well, with strong sales of Xbox 360 consoles and titles. The company is expected to be a star next month at a major Electronics Entertainment Expo with "Natal," technology that will let players use Xbox 360 consoles with natural gestures instead of handheld controllers.

However, Apple's iPad tablet computers and indications that such devices based on Google-backed software are on the way may be among factors behind the shake-up at Microsoft.In addition, Microsoft has lagged behind Apple in the mobile business. Microsoft will try to gain some market share with the release of the new version of its Windows mobile operating system later this year.

Microsoft mobile and entertainment division has also developed the 'Surface' computer that built touchscreen control capabilities into table tops and other large areas. The same division has been also responsible for Microsoft's Zune media players, which have failed to challenge iPods made by Apple.