Ed Fries, the head of Microsoft's games division, has resigned from the company, catching employees and industry observers by surprise.

Fries was a key component of Microsoft's (MSFT: Research, Estimates) success in the gaming industry. An 18 year veteran of Microsoft, he took over the fledgling games division in 1995. At that time, Microsoft Games consisted of little more than the company's popular Flight Simulator program for the PC. In subsequent years, he was actively involved in the development and launch of the Xbox gaming system and oversaw the acquisition of several major game developers, including Bungie Software (which is responsible for "Halo", the Xbox's most successful title) and Rare.

Read more: CNN.