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Microsoft's units looks more concise, focused, but its rumored appointments are head-scratchers

According to All Things Digital, Microsoft Corp. (MSFT) CEO Steve Ballmer will announce his long awaited executive revamp on Friday in an effort to create "functional coherence" and reposition his firm as a "devices and services" provider.

Mr. Ballmer has reportedly tapped the experience and expertise of fellow CEO Alan Mulally, who steered Ford Motor Comp. (F) to a path of recovery and growth.  Mr. Ballmer has deep roots to the Detroit area where his father was a long time CEO.  A sign of how deeply Mr. Ballmer trusts Mr. Mulally lies in his offer to write the TIME 100 entry for the Ford CEO back in 2009.  In that entry Mr. Ballmer writes, "[Mulally] understands the fundamentals of business success as well as any business leader I know."

With Mr. Mullaly's help it's clear there's likely to be some serious and ambitious changes. Here's how those changes are expected to break down.

Ford CEO Alan Mullay gave Microsoft CEO Steve Ballmer a brand new Ford Fusion Hybrid in 2009 to celebrate the production of one million SYNC vehicles.

Old Units
  • Windows and Windows Live (Surface)
  • Windows Phone
  • MS Office
  • Online Services (Bing, MSN, etc.)
  • Servers and Tools
  • Business Solutions
  • Interactive Entertainment (Xbox One)
  • (marketing is spread over various units)
New Units
  • Windows (Windows 8.1, Windows Phone 8.1)
  • Hardware (Surface, Xbox One)
  • Software (Bing, MS Office, etc.)
  • Cloud and Business Products (Windows Server, Sharepoint, SQL Server, etc.)
  • Marketing (unified)
Microsoft Exec changes
Big Winners

Tony Bates
Where he was: President of Skype
Where he is going: President of business development, corporate strategy and mergers/acquisitions

Julie Larson-Green
Where she was: Windows CVP
Where she's going: President of Hardware (Xbox One, Surface, etc.)

Tami Reller
Where she was: Windows CMO/CFO
Where she's going: President of Marketing

Qi Lu
Where he was: President of Online Services
Where he is going: President of software (Bing, MS Office, and other apps)

Terry Myerson
Where he was: Windows Phone CVP
Where he is going: President of Windows

Satya Nadella
Where he was: President Servers & Tools
Where he is going: President of Cloud and Business Products

Holding Steady

Lisa Brummel
Where she was: Chief People Officer
Where she's going: (same)

Amy Hood (new)
Where she was: Chief Financial Officer
Where she's going: (same)

Brad Smith
Where he was: EVP, General Counsel
Where he is going: (same)

Kevin Turner
Where he was: Chief Operating Officer
Where he is going: (same)

Big Losers

Kurt Delbene
Where he was: President MS Office
Where he is going: Fired or demoted

Kirill Tatarinov
Where he was: President Business Solutions
Where he is going: Fired or demoted

Out Already

Don Mattrick
Where he was: President of Interactive Entertainment
Where he is going: CEO of Zynga, Inc. (ZNGA)


What do insiders think?  One quoted in the All Things D piece says, "If this is all about an org chart and not how to build great products, it does not matter what org chart Ballmer presents. Consumers buy products, not a management structure."

Personally, I feel this quote is true but misleading.  At the end of the day the shakeup -- if executed as stated above -- does constitute a serious reorganization at Microsoft.  From a units perspective it's brilliant.  Why have two or three separate units working on hardware?  Why have two operating systems units?  Why have multiple software units?  Why divide online and offline consumer software?

The new units look clean and concise.  Each unit has a clear purpose and builds on a key strength.  At the end of the day I'm pretty sure that will help products.

What worries me more are the people Microsoft is reportedly considering putting in charge of those units.  While [personally] I love Windows Phone and am neutral on Windows 8, I recognize that Microsoft has failed both in marketing and in taking criticism when it comes to products (see the faux return of the start button).  I don't get why you would boot/demote two of the Presidents of your most successful units -- MS Office and Business Solutions.

Tami Reller
Tami Reller led one of the most poorly received Windows marketing efforts in the OS's history -- Windows 8.  Should she really be put in charge of all marketing after that performance?  
[Image Source: WinSuperSite]

Probably the most baffling pick, though is Tami Reller.  If Windows 8 failed in one thing most of all, it was marketing.  Microsoft failed to explain its ambitious overhaul and failed to sell consumers on that vision.  To put that person in charge of all marketing is somewhat astounding to me.

In short, I feel Mr. Ballmer has his head on straight when it comes to the nature of the reorganized units, but when it comes to executive personnel it seems that some sort of politics or favoritism is afoot.  Perhaps some of the risers will turn around, but when you promote heads of mostly struggling units and demote heads of successful units, you're setting a troubling course.

Source: All Things D

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Not much will change
By Ammohunt on 7/9/2013 1:56:52 PM , Rating: 2
High level Org restructuring rarely changes anything people; continue to do what they have always done. Only fresh blood with fresh ideas drive innovation and performance. It could also have the opposite effect especially high level execs that like to micromanage at the middle management level or worse still think they are developers(all kidding aside; the stories i could tell) Either way this reorg is in response to obvious issues within Microsoft and my guess the Board of Directors dissatisfaction i really like Microsoft let hope they can pull out from the recent debacles like Windows 8,8.1

RE: Not much will change
By Jeffk464 on 7/9/2013 2:00:33 PM , Rating: 5
Seems to me they should replace Balmer.

RE: Not much will change
By Brandon Hill on 7/9/2013 2:03:09 PM , Rating: 2
Everyone says that, but replace him with who? Gates definitely isn't coming back.

RE: Not much will change
By Jeffk464 on 7/9/2013 2:19:31 PM , Rating: 2
yeah, I don't get it gates isnt really older than balmer is he?

RE: Not much will change
By Samus on 7/9/2013 6:38:09 PM , Rating: 2
It isn't a question of age. Gates simply doesn't want to run Microsoft. If Microsoft starts to fall apart and doesn't generate the revenue he needs to fund the Bill & Melinda Gates Foundation, then he'll get involved, but Microsoft has maintained profitability since he left.

It hasn't grown like Apple, but it's steady.

RE: Not much will change
By Reclaimer77 on 7/9/2013 2:55:59 PM , Rating: 2
Everyone says that, but replace him with who?

Well thanks to Balmer, a ton of the exceptional talent Microsoft once possessed have either moved on, or have been released.

So that's an excellent question...who indeed?

Don't get me wrong. Balmer is a good house sitter. But Microsoft just needs more than that at the helm right now. Which explains why Microsoft hasn't had a single growth year since Gates left.

This says it all:

RE: Not much will change
By MrBlastman on 7/9/2013 6:10:25 PM , Rating: 2
Share growth of a mature company/business is not always indicative of revenue/profit growth. It also is a huge function of infatuation of the company in the marketplace.

Microsoft has grown nicely over the last decade. In...

2004, they had 36.8 billion in revenue
2005, 39.78
2006, 44.28
2007, 51.122
2008, 60.52

The real problems began after that in 2009/10 when they had 61.989
2011, 69.95
2012, 73.72

So they've been growing--much more than that chart shows (which is just market price), but it has stagnated due to their competition with Google and Apple in the true areas of growth--mobile.

RE: Not much will change
By Reclaimer77 on 7/10/13, Rating: 0
RE: Not much will change
By Nephelai on 7/10/2013 7:22:24 AM , Rating: 2
Revenue doesn't mean much either. What you should look at is earnings / dividends per share for growth and difference. Growth being reflective of normalised growth and difference being reflective of efficiency.

RE: Not much will change
By DiscoWade on 7/9/2013 4:22:21 PM , Rating: 4
Well, you can replace Balmer with a cardboard cutout of Steve Balmer and instantly the company would be better managed. It doesn't matter who you replace him with because almost anybody would do a better job. I would replace Steve Balmer with a telephone answering machine, then at least somebody at Microsoft will listen to the customer.

RE: Not much will change
By ncage on 7/9/2013 10:39:25 PM , Rating: 2
I'll tell u two good options: Mark Russinovich & Scott Gutherie. They both get it! They need someone who is tech visionary like Gates was.

RE: Not much will change
By Ammohunt on 7/9/2013 2:41:26 PM , Rating: 2
Microsoft just needs to get their head out of their ass and realize that they are not the industry leaders they once were and can't just dictate radical change to consumers or offer less than equal alternatives to market leaders and expect massive uptake e.g. iPad vs. Surface. To quote a famous song "The thrill is gone!"; time to pull up their pants and get to work inside that new reality bubble.

Windows change
By FITCamaro on 7/9/2013 2:52:58 PM , Rating: 3
Windows for PC and Windows Phone both being under the same person should hopefully be a good thing.

RE: Windows change
By Unspoken Thought on 7/11/2013 9:52:25 AM , Rating: 2
I thought the same. Consolidating their divisions will hopefully allow for more cross-platform features and integration.

Stick a fork in M$....they are done.
By MasterBlaster7 on 7/9/2013 6:02:58 PM , Rating: 1
Widows 8 is the death knell...mark my words.

So, what exactly does a M$ death look like? Sure, they still have their core products, Windows and Office, but there will be no further innovation. It will be a stagnant company with a lot of pathetic screaming and yelling from the CEO.

This is not the Chameleon like IBM nor the "phoenix from the flames" Apple. This is a group of Harvard trained business guys that saw a visionary business opportunity back in the 70s. They have been riding that wave ever since.

One thing M$ is not is creative. They bought the original DOS from some guy in Seattle. And, you don't need to be Steve Jobs to see that monopolizing a program like Office would pay big bucks. Speaking of Jobs....It was fricking gates that tried to launch the original "ipad" or "tablet" but didn't understand market timing, tech timing, or pinash like Jobs did. The "ipod" the "iphone" and the "ipad" are Jobs "Montezuma's revenge" against M$ for crushing apple in the 80s and 90s.

Stick a fork in M$...or just MS now....they are done.

By Donkey2008 on 7/10/2013 12:46:50 AM , Rating: 2
Right. I am sure millions of businesses will just stop installing Exchange and SQL servers. Instead of Server 2008 or 2012, they will use royalty free Linux distros. They will immediately adopt Linux alternatives and even OSX for desktops, nevermind that the majority of applications they use won't run on either. Everyone will start using Open Office or Google docs.

So many terrible alternatives to Microsoft products in the workplace. I think they will be just fine.

Right on Jason
By bugnguts on 7/9/2013 2:39:21 PM , Rating: 2
I take anything axe grinding Jason says with a grain of bath salt, but on this I think Jason has nailed it right on. MS suffers from too much of everything lacking clear direction. The new business units make a lot of since, but given your info is correct about the winners and losers I think what the'll.

Office has been the one product MS has consistently improved. If this is a shake up to look better for next two quarters then yes pick the pretty people, but if MS wants to truly change you need to place leaders that have consistently performed well.

This is good
By edge929 on 7/9/2013 3:09:28 PM , Rating: 2
I think this is a good move for Microsoft. All large companies have fragmentation on some level. I work for a very large bank and even after several re-orgs over the years we still have fragmentation. Nature of the beast. One exec is given the power to do something so they start a small independent project and it eventually grows without a unifying org structure. Next thing you know branding and services do not match across the company, different teams use their own services that do the same thing and it just eats away at your bottom line. The default and banking sides use different mail templates, the online banking team uses it's own advertising material, etc. I just hope Microsoft can get their crap together and leverage the new re-org. If there is bitterness and/or drama from the shakeup, we'll soon know.

Sign of the time
By YearOfTheDingo on 7/9/2013 6:30:09 PM , Rating: 2
Reminds me of the cabinet shuffle that occurred in the Obama administration. People who have demonstratively failed get promoted just to rebuff critics. Avoidance of bad press somehow came to matter more than performance. If letting someone go buys good press, then out the window he goes. If doing so might be seen as an admission of failure, then it's time to circle the wagons.

One Sure Bet...
By mmatis on 7/10/2013 8:39:04 AM , Rating: 1
is that one of the biggest losers will be the consumers.

"Intel is investing heavily (think gazillions of dollars and bazillions of engineering man hours) in resources to create an Intel host controllers spec in order to speed time to market of the USB 3.0 technology." -- Intel blogger Nick Knupffer

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