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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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RE: is it just me?
By Argon18 on 6/24/2013 12:37:37 PM , Rating: -1
How do you mean "they have the whole enterprise market"? That's nonsense. UNIX is still king of the enterprise. Heck, mainframes are still a $Billion dollar business for IBM. Microsoft is also non-existent in high-performance technical computing.

The only segment of the enterprise market that Microsoft owns, is the corporate desktop (MS Office), and corporate email (Exchange). Back end processing is all Unix, Linux, and Mainframe at most large businesses and government.


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?

LOL

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.

quote:
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.


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