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Will a bigger leadership pool right the ship -- and what will become of current top brass?

All Things D's Kara Swisher is reporting:

According to sources close to the situation, Microsoft CEO Steve Ballmer is likely to unveil his plans to restructure the tech giant to a larger group of senior execs by July 1.

The report is not altogether unexpected.  Microsoft Corp. (MSFT) has been struggling to appease consumers -- be it the embarrassing abandonment of digital rights management (DRM) plans for the Xbox One and the company's struggles to repair the Windows brand's image with Windows 8.1, the successor to a poorly received makeover.

I. Microsoft Shifts Gears

But the change also owes to a deeper shift at Microsoft from a company of discrete software products to a "devices and services" model.  

The latter ("services") part of chief executive Steve Ballmer's vision reflects on a broader industry-wide trend.  While onerous to offline users, increasing connectivity has allowed companies like Adobe System Inc. (ADBE) to transition their software portfolios to subscription services.  Advantages of this approach include the ability to provide licensed customers with universal access, the removal of user troubleshooting, and the ability to quickly deliver updates/improvements/patches.

Steve Ballmer
Microsoft CEO Steve Ballmer [Image Source: Bloomberg]

The former ("devices") is more unique to Microsoft.  Like Apple, Inc. (AAPL) or Google Inc. (GOOG), Microsoft has found that its software experience has granted it the vision to design products that in some ways are more appealing than those of primarily hardware firms like Dell, Inc. (DELL) or Hewlett-Packard Comp. (HPQ).

While the Surface tablet-laptop convertible has fallen short of its sales expectations, it was also perceived -- in spite of its flaws -- as a stylish and utilitarian embodiment of the potential of Windows 8.  Emboldened by that success Microsoft is reportedly considering a similar approach in the smartphone market.  

Microsoft's efforts are a hybrid of Apple and Google's.  Unlike Google, it does not contract third party OEMs for its branded products; but unlike Apple it does not lock out third-party designs.  Like Google, the Microsoft-branded devices seek to illustrate the company's vision for hardware-software integration for a specific operating system release, while like Apple they're designed to raise the bar on quality over baser OEM fodder.

With that in mind, the shift is also motivated -- to an extent -- by the desire for self-preservation.  Some shareholders have called for Mr. Ballmer to step down due to Microsoft's recent stumbles and low share prices.  But Mr. Ballmer still has some leverage -- he's served as CEO for almost a decade and a half and has the blessing of Chairman Bill Gates who founded the company.  Bill Gates chose to anoint Mr. Ballmer as the company's new leader, and that makes displacing him difficult -- to say the least.

With a shakeup, Mr. Ballmer can use that leverage to hang onto his top position, showing investors he's willing to change the formula when the fit is poor.

II. Some Top Executives May be Booted

Microsoft today is full of young faces.  The company lost Robbie Bach and J Allard -- two veterans from the fruitful 90s -- due largely to the company's unwillingness to productize the Courier, a slick tablet design that Microsoft hatched pre-iPad in 2009.  After Apple's iPad became a massive hit, J Allard and Mr. Bach reportedly left in disgust.

The man who killed Courier -- Steven Sinofsky -- was also booted from the ship last year, ultimately, vindicating Mr. Allard and Mr. Bach's vision.  The decision to expand Microsoft's executive ranks would likely have displeased Mr. Sinofsky greatly as he spent much of his career at Microsoft trying to cut down on excess management, which he viewed as unhealthy redundancy.

Other prominent Microsofters to leave include Nathan Myhrvold, who now heads "patent troll" Intellectual Ventures; former Business Division President Jeff Raikes, who left to serve as CEO at Bill Gates' charitable foundation; former Windows co-president Kevin Johnson who became CEO of Juniper Networks Inc. (JNPR); and of course long-time CEO Bill Gates.

Steven Sinofksy
Windows President Steven Sinofsky was the company's most prominent executive ousting to date. [Image Source: ExtremeTech]

A source says the upcoming changes are designed to shake up the ranks of Microsoft's young guns and restore the kind of management that propelled the company to success in the 1990s.  Comments the source to All Things D, "It feels like it is going to be titanic — that Steve is doing this change for his legacy.  And it’s the first time in a long time that it feels like that there will be some major shifts, including some departures."

Among those who the sources say may be either promoted -- or on the flip side kicked off the ship -- include Satya Nadella, president of Microsoft’s Servers and Tools division; Tony Bates, president of its Skype communications unit; and Don Mattrick, president of its Interactive Entertainment division (which includes the Xbox business); Qi Lu, president of Microsoft’s Online Services unit; and CVP Terry Myerson, who runs the company’s Windows Phone division.

Microsoft presidents
Microsoft's (left to right): Satya Nadella (Servers and Tools), Tony Bates (Skype), Don Mattrick (Interactive Entertainment) will likely see their roles shift.

The big question is whether the changes -- ranging from the creation of new positions to firings to shuffling -- will be announced before, after, or at Microsoft's annual BUILD Conference for developers, which runs this week from June 26 to 28.

Source: All Things D

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is it just me?
By GulWestfale on 6/24/2013 11:54:48 AM , Rating: 4
i don't know about you guys (and gals), but for myself has become less and less relevant over the years. i first started to get into PCs in the days of windows ME (a travesty, i know lol), and back then MS was king. win2000 and winXP were fantastic, and you needed their OS to play games, and everything seemed... alright, somehow.

now we have an MS that seemingly changes windows interface just for teh sake of changing it, is losing market share rapidly (openoffice, firefox, chrome; but also to a more limited extent linux and even OSX), and everything they do seems idiotic.

like a bunch of over the hill old guys desperately trying to seem cool (see picture of ballmer above), clinging to their once great past.

i wonder if they'll still be a force in the PC business ten years from now.

RE: is it just me?
By retrospooty on 6/24/2013 11:59:23 AM , Rating: 1
"like a bunch of over the hill old guys desperately trying to seem cool (see picture of ballmer above), clinging to their once great past."

They sure are. They are a long way off, but starting to look alot like HP. Sad.

They do still have the whole enterprise market though. It's not like they are hurting. They will have major losses in the consumer market if they dont pull thier heads out of their collective ass though.

RE: is it just me?
By Argon18 on 6/24/13, Rating: -1
RE: is it just me?
By retrospooty on 6/24/2013 1:07:51 PM , Rating: 3
You are overplaying Unix and underplaying MS in the server market. Almost every company has MS servers. Some have Unix/Linux in addition to run certain things and some larger corps have other specific purpose driven servers, but MS owns it by far, by a huge margin and isnt going anywhere any time soon.

RE: is it just me?
By half_duplex on 6/24/2013 1:39:28 PM , Rating: 3
Email and Office?


I guess you're not familiar with SQL Server and the entire .NET software development world.

RE: is it just me?
By retrospooty on 6/24/2013 1:45:37 PM , Rating: 2
I know right? In enterprise, MS is far bigger than everyone else combined.

RE: is it just me?
By Argon18 on 6/24/13, Rating: -1
RE: is it just me?
By retrospooty on 6/24/2013 4:24:23 PM , Rating: 3
Database and middleware at large companies is but one piece... MS still does the whole pie. Small, med large business, end to end solutions etc. Its not that Unix doesnt have its palce, its just that its place isnt near as large or important as MS's.

RE: is it just me?
By themaster08 on 6/24/2013 5:27:18 PM , Rating: 3
I bet those companies are also using Active Directory Domain Services to manage users. Nothing in the enterprise world compares to Active Directory for domain management.

I guess SQL and Sharepoint got to be billion dollar businesses by not being used in large capacity.

RE: is it just me?
By retrospooty on 6/24/2013 6:51:33 PM , Rating: 2
"I bet those companies are also using Active Directory Domain Services to manage users. Nothing in the enterprise world compares to Active Directory for domain management."

Exactly... And even mentioned Exchange as if its some piddly little thing. Exchange is the primary method the entire business world communicates with each other both internally and externally.

It never fails, any time you mention how MS dominates in enterprise someone always come up and says something to the effect of "this company does this better" (or more). Bla... There are alot of companies that do alot of things better than MS, but in Enterprise none of them does everything that MS does. No-one else can do the whole thing, no-one else is even close. No one else exists at all. Zero.

Everyone else is just bits and pieces in their niches.
- also "none of us is a dumb as all of us" ;)

RE: is it just me?
By MojoMan on 6/25/2013 7:54:35 AM , Rating: 2
You are correct. Just wanted to add my 2 cents...

I am a system admin for a 2,200 user enterprise. Google is coming up with fantastic tools for managing their Chromebooks (which we are increasing buying as their capabilities increase - including offline ones). We just turned the power off to our Exchange server. Good riddance. I hate PowerShell. LOL...

RE: is it just me?
By Ammohunt on 6/27/2013 5:19:02 PM , Rating: 1
You posses the old UNIX battleaxe mentality(i thought you guys went extinct). What you are saying was relevant mid to late 90ies the fact is modern environments that are well architected use a mix of of everything. Big iron Unix is quickly getting replaced with Linux; Windows on the other hand is in no immediate danger of being supplanted by Linux because the roles it plays in the environment cannot be replaced easily with Linux. The other phenomenon is business that start out FOSS only so you almost never see MS or Unix in those shops.

Anyway I have 16 years as a Systems Administrator and i have implemented Windows Server MSSQL,Linux Oracle and Unix Oracle database solutions of which the majority were MSSQL which is fine for all but maybe 5% of database usage situations it also costs about a 10th of the cost of a big iron unix setup after licenses and hardware costs. Of course you have to posses the know how to build out such environments properly.

Either that or their needs are smaller departmental sized and they can get away with a less robust product like SQL or .NET.

Thanks for the chuckle! not to be mean but such a statement just wreaks of ignorance.

RE: is it just me?
By Samus on 6/25/2013 1:17:46 AM , Rating: 2
Microsoft killed Danger just like HP killed Palm. Both were great, smaller companies with a brilliant product, completely destroyed by old-world visions of mega-corporations.

I couldn't even imagine what the mobile landscape might be like today if there were still the Sidekick (the first cloud-based phone) and the Palm Pre (WebOS, the first entirely gesture-driven UI with revolutionary multitasking)

But you can't forget Steve Job's role in destroying the most important, and still missing feature of the smartphone. The keyboard. All devices from the companies I mentioned (Danger/Palm) always had a physical QWERTY keyboard, and later products with touch screens still understood the necessity for physical keys.

Steve Jobs, the blood of every person killed by a distracting touch screen device is on your hands. You completely threw the most important human sense, that of touch, out the window with your ridiculous idea. The industry is also at fault for following your stupid path of form-over-function.

RE: is it just me?
By arazok on 6/24/2013 12:10:57 PM , Rating: 2
I think they will.

MS has a history of missing trends and losing out in the initial stages of new markets. But once they identify it, they eventually manage to come up with a competitive product and slowly eat their way into dominance.

The consumer revolution in smart phones/tablets was sudden and moved quickly, but the level of innovation is tapering off. MS should have little trouble winning back consumers, it will just take them a few years to do it. Windows 8 flopped, but give them a release or two and they’ll fix all the stuff that people don’t like about it and it will come back.

RE: is it just me?
By melgross on 6/24/2013 12:38:00 PM , Rating: 1
It's different now, though. In the past, Windows seemed to be everything. Mac OS had dropped to 2.8% marketshare in the US, and Linux was stuck at 1%. Today, OS X is at 13%, or higher, though Linux is still stuck at 1%.

But the major change is in tablets and smartphones. Like it or not, that's totally shaking up the computer industry. Microsoft has been a no show there, and its late entry is going to be very hobbling. They will never get the 90%, or higher, that they had with desktops, and that completely changes the game. It means that they will never again have the ability to dictate "standards". They now have to follow.

That means they won't have companies, governments and consumers lining up to automatically upgrade to a new Microsoft product. They will actually, for the first time, need to prove to them that that upgrade is in their best interests, which will be more difficult to prove.

Good luck!

RE: is it just me?
By arazok on 6/24/2013 1:04:33 PM , Rating: 2

13% sounds good compared to 1%, but it’s still a pathetic number.

I agree, the change is with tablets and phones. However, it’s just like I said. MS was late to the game with a good offering, but it’s here now with Windows 8. Say what you will with Win 8 on the desktop, but it’s great on a tablet and phone. I have both and l think they’re fantastic – and it’s only the first version on these devices.

MS is still playing catch up. They got the software out, but the manufacturers have been painfully slow to come up with the hardware for it - particularly touch enabled. In a year we’ll see a lot of laptops, convertibles, and tablets at good prices, as well as more variety in phone hardware. I think you’ll see sales improving drastically at that point. They took a hit, changed course, and now they’re getting back up to speed.

If Phone 8 hits 10% market share, it will have hit that critical mass needed for people to take notice. I think in 5 years time, you’ll see Android and Win8 eating the carcass of Apple’s limited phone offerings. Apples model of owning the hardware and software didn’t work for 25 years, and then suddenly it did. I think that’s a fluke, and it’s going to end quickly.

RE: is it just me?
By retrospooty on 6/24/2013 1:35:45 PM , Rating: 3
"Today, OS X is at 13%, or higher"

On what planet is that? Its beet at 7% for like 2 years now and isnt growing. The "meteoric rise" was from 4% to 7% from the early 2000's to 2011.

RE: is it just me?
By smilingcrow on 6/24/2013 4:21:30 PM , Rating: 2
People often confuse market share in a particular country with total worldwide market share.

RE: is it just me?
By retrospooty on 6/24/2013 5:49:46 PM , Rating: 2
LOL... Yes, and even further, they take only one good quarter at that.

RE: is it just me?
By zephyrprime on 6/24/2013 4:02:50 PM , Rating: 2
Microsoft of a no show? They have been making smart phones for more than 10 years. They have been making tablets for nearly 10 years as well. The problem is, they haven't been giving those nascent markets enough attention and their vision just wasn't good enough. Also, their reliance on third party oems resulted in products that weren't good enough.

RE: is it just me?
By sorry dog on 6/24/2013 12:32:35 PM , Rating: 2
It is just me or when was the last time you saw a picture of Balmer with a normal facial expression?

I mean when every media picture of you is trying to make you out to be a clown.... it might be time to take a time out.

Sometimes I wonder when Redmond is going to sink from the weight of all the egos up there....

RE: is it just me?
By conq on 6/24/2013 1:28:57 PM , Rating: 2
Yeah, the "old" Microsoft is gone and they haven't really quite figured out the "new" Microsoft yet. There's certainly some unsuccessful soul searching currently...

RE: is it just me?
By Nekrik on 6/24/2013 4:12:18 PM , Rating: 2
"now we have an MS that seemingly changes windows interface just for teh sake of changing it"

So do you give any credence to the idea that they are trying to use Windows 8 as a transitional step to whatever Windows 9 and/or 10 may be? My thought is that they are trying to prepare people for a more modern method of user interaction (and at the same time, having the same basic approach to user interaction on any device, be it phone, tablet, home PC, Xbox, etc...). The point and click interface is becoming less relevant as voice control and gesture input become more polished.

RE: is it just me?
By retrospooty on 6/24/2013 4:20:42 PM , Rating: 2
"they are trying to prepare people for a more modern method of user interaction "

I think the point people dislike is the fact that they are forced into it. It is a good UI for a tablet/touch screen device... the problem with that is it has been forced on us for desktop/laptop use - where it sucks, especially with larger screens with higher res. The really irritating point of that is that it didn't have to be that way. The start menu was there in the developers preview of Windows 8. It was there and working and they took it out on purpose. Not for any technical reason, just because they wanted to force the touch UI on non-touch devices.

RE: is it just me?
By Nekrik on 6/24/2013 6:26:21 PM , Rating: 2
I can partially agree with you. The reason for not including it was to push users towards the area they were hoping would be adopted. I think they have a good 5 year plan, but failed at educating users as to why the changes have occurred (the reason being they are developing a foundation to gradually move users to new interactions).

Regardless, the change was not liked and kinda put back in. Here it doesn't seem to have affected any other user scenarios so not a big deal.

RE: is it just me?
By JohnWPB on 6/24/2013 5:41:25 PM , Rating: 2
Probably 10 years from now Ballmer will care less, cause his golden parachute will let him live like a king some where, while the company he once ran has gone downhill faster than a downhill racer.

"The Space Elevator will be built about 50 years after everyone stops laughing" -- Sir Arthur C. Clarke

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