Microsoft's CIO Jumps Ship; Company Considering Focusing on Devices, Services
June 3, 2013 10:49 AM
Microsoft CEO Steve Ballmer is under pressure to make big changes
Major executive shakeups continue for the world's largest OS maker
After a half decade with software giant Microsoft Corp. (
) chief information officer (CIO) Tony Scott has left the company. The departure was first revealed via an update to
Mr. Scott's profile
on LinkedIn Corp.'s (
) titular resume site which listed his role at Microsoft as "former CIO". The change was
, which received official confirmation from Microsoft shortly thereafter.
I. Tony Scott Steps Down
Prior to joining Microsoft in 2008, Mr. Scott has served as CIO at The Walt Disney Comp. (
), following executive assignments at General Motors Comp. (
) and Bristol Myers Squibb Comp. (
Mr. Scott had been integral in pushing for heavier use of the so-called "dog-fooding" approach;
a popular approach at Apple
, Inc. (
) and other successful software firms that involves giving test builds of upcoming products to employees to test drive prior to a full commercial rollout. But that role was reportedly diminishing as Microsoft had moved towards consumer-facing cloud-based services like
In a brief statement Mr. Scott commented:
My dad passed away at Easter time, so taking a little time to get my mother re-settled, get my instrument rating done (I’m a pilot), and work on a couple of other long delayed personal projects. Will go back to ‘work’ (in some form) in a few months, but right now just focusing on the above.
Tony Scott, Microsoft's former CIO
Microsoft's IT product and services management vice president, Jim Dubois, will serve as the interim CIO.
II. Continuing Ballmer's "Significant Shift"
While it's unclear who will replace Mr. Scott,
All Things D
's Kara Swisher
that Microsoft's Servers and Tools division president, Satya Nadella; Skype communications division president, Tony Bates; and Interactive Entertainment division president Don Mattrick will be among those that Microsoft CEO Steve Ballmer is considering.
Microsoft's rising stars (left to right): Satya Nadella (Servers and Tools), Tony Bates (Skype), Don Mattrick (Interactive Entertainment)
Mr. Scott's departure is only the latest major shakeup in recent months at Microsoft. In November, Windows division president
Steven Sinofsky hit the road
was subsequently divided between former CFO and CMO Tami Reller on the business/marketing front and by Julie Larson-Green on the software/hardware development front.
Last fall, Mr. Ballmer spoke of big changes at Microsoft commenting:
This is a significant shift, both in what we do and how we see ourselves — as a devices and services company. It impacts how we run the company, how we develop new experiences, and how we take products to market for both consumers and businesses.
The fresh focus on becoming a devices and services company (rather than merely an OS and software firm) comes amid shareholder demands for more of a return on their investment.
III. Investors Demand Change
A subsidiary of Japanese investment house Nomura Holdings, Inc. (
), Nomura Equity Research, has been tracking the dispute. Its analyst Rick Sherlund in a research note pushed Microsoft's management to sell the
a cash-neutral unit
, according to reports) and the
Bing search product
a major money loser
Some investors want Microsoft to sell its Xbox unit.
Disruptive investor David Einhorn has tried to
push for Mr. Ballmer's resignation
and similar big shakeups
since early 2011
. However, with only 0.11 percent of shares (at the time) and with Microsoft
posting a very strong fiscal 2011
his cries fell mostly on deaf ears.
David Einhorn (Greenlight Capital) wants Ballmer's resignation. [Image Source: Value Walk]
slowing PC sales
criticisms about its design direction
with Windows 8, and
have renewed the calls for change. ValueAct Capital Parnters, a firm managed by Jeff Ubben, recently acquired approximately 1 percent of Microsoft shares (for reference CEO Ballmer owns approximately 4 percent of Microsoft shares). Mr. Ubben has joined the push for changes, albeit stopping short of Mr. Einhorn's most draconian demands, such as Mr. Ballmer's resignation.
Thus it appears that while Mr. Ballmer's seat may be secure for now, his executive team and business strategies are slotted for some big shakeups.
LinkedIn [Tony Scott]
All Things D
"If you look at the last five years, if you look at what major innovations have occurred in computing technology, every single one of them came from AMD. Not a single innovation came from Intel." -- AMD CEO Hector Ruiz in 2007
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