Microsoft's Window 7 is a huge hit, passing its predecessor Windows Vista and soaring towards passing Windows XP.  Microsoft's Xbox 360 is finally yielding a net profit (unlike the first Xbox, which lost Microsoft billions), and is currently in second place behind only the Nintendo Wii.  The outlook for the Xbox 360 looks only to improve with the launch of Project Natal, a slick 3D camera-controlled system.

However, for some of Microsoft's other divisions, the picture is looking increasingly grim.  Sales of Windows Mobile 6.5 phones are plunging amid tough competition from Google's Android, the iPhone, and RIM's Blackberry smartphones.  And Windows Phone 7 reportedly will have a number of key features missing at launch -- copy and paste (which will reportedly only be available within the mobile version of Office), multi-tasking, and home screen customization.

The Zune has also struggled.  It saw sales drop off in 2008 and 2009 after initial enthusiasm.  Despite nice hardware and a promising music subscription service, Microsoft has been largely unable to successfully market the product.

As a result of these problems Microsoft is reportedly planning a major shakeup of its Entertainment & Devices Division, according to The Wall Street Journal.  This division covers the Xbox, Zune, and Windows Phone businesses and made $1.67B USD in the first quarter of this year, or roughly 11 percent of Microsoft's total revenue.

Among the current departures that are broadly thought to occur is the departure of J Allard, the chief experience officer and chief technology officer.  Allard was reportedly leading Microsoft's Courier tablet project.  Despite a relatively positive reaction from the public, Microsoft curiously decided to scrap plans of bringing the device to market.  The Courier could have proved a key competitor to Apple's iPad, which may move 8 million units this year, according to at least one analyst.

Allard was reportedly angry that Microsoft scrapped the project, which seemed so promising.  He threatened to quit, and reportedly was subsequently shown the door by Microsoft CEO Steve Ballmer.

Robbie Bach, a 22-year Microsoft veteran and the division's president, may be another target.  Otherwise, a broad shakeup is expected across the middle level management ranks.

The question becomes whether Microsoft will execute a similar shakeup of its internet division.  Despite scoring a big partnership with Yahoo in 2009, which made Microsoft's Bing power Yahoo's search, the pair have since floundered.  According to market research firm Net Applications, Bing has fluctuated around 3 percent, but failed to produce significant growth.  Yahoo, meanwhile has continued to plunge, dropping from 7.16 percent in July 2009 to 5.30 percent in April 2010.

No such shakeups of the internet division have been hinted at, but Microsoft obviously needs some sort of new direction in this division as well.  The Entertainment & Devices changes are expected to be announced within the upcoming week.