Bryan Lee, corporate vice president of the technology behemoth's entertainment and devices division, was instrumental in the development and release of the Zune music player. He also played a key role in creating the company's Xbox game console division, and in introducing Microsoft's Internet television software.

Taking Lee's place will be J. Allard, also an Xbox leader, who will be in charge of helming Microsoft's Zune strategy.

Lee is expected to leave the company in the next few weeks, and has not said that he is going to another company but rather that he has "decided to retire from Microsoft," according to a statement issued by the company.

Zune Tune

When it began shipping in November 2006, Microsoft hoped Zune would be an "iPod killer," knocking out the dominant player in the market. Although Zune had a good start, with sales expected to exceed a million units by June of this year, it has hardly had the impact on the iPod crowd that Microsoft had hoped.

In the frenzied December buying spree around the holidays, Zune grabbed roughly 10 percent of the music device market, with Apple ringing up the majority of sales, according to data from several research firms.

But Microsoft has noted that Zune is only the beginning of a more long-term strategy in entertainment, and, specifically, in countering Apple and other entertainment heavyweights in the marketplace.

The company has been particularly intent on making its Xbox game console appealing to a range of users beyond gamers, hoping that it will replace DVD players in the living room.

Executive Office

It remains to be seen what effect Lee's departure might have on the Zune strategy, if any. What is most likely is that J. Allard will face many of the same challenges that Lee encountered in his tenure as the Zune chief.

In particular, Lee faced difficulties in getting content owners to tweak restrictions on music tracks so that Microsoft could have more flexibility in porting the tunes from the device to a PC.

Also probable is that Allard might have to work quickly to deliver a level of success for Zune, or he could find his position in jeopardy, noted John Challenger, chief executive of outplacement firm Challenger, Gray & Christmas.

"We're in a business culture where you have to show results on projects like Zune, or you're out," he said. "It's like baseball managers changing the lineup to try and find the right combination."

In terms of Lee's retirement, Challenger is skeptical that the move is completely voluntary. "Who retires at 43?" he asked. "More likely, that's just a euphemism for Microsoft changing him out in an attempt to make shareholders happy and create a change for Zune."