Report: Ballmer's Plan For Microsoft Makeover Centers on Firings, Tighter Management
June 24, 2013 11:23 AM
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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. (
) has been struggling to appease consumers -- be it the
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. (
) 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.
Microsoft CEO Steve Ballmer [Image Source: Bloomberg]
The former ("devices") is more unique to Microsoft. Like Apple, Inc. (
) or Google Inc. (
), 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. (
) or Hewlett-Packard Comp. (
While the Surface tablet-laptop convertible has
fallen short of its sales expectations
, it was also perceived --
in spite of its flaws
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
, who left to serve as CEO at
Bill Gates' charitable foundation
; former Windows co-president Kevin Johnson who became CEO of Juniper Networks Inc. (
); and of course long-time
CEO Bill Gates
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'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
for developers, which runs this week from June 26 to 28.
All Things D
This article is over a month old, voting and posting comments is disabled
RE: is it just me?
6/24/2013 1:04:33 PM
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.
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