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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: Here's your plan:
By Breakfast Susej on 6/25/2013 11:55:00 AM , Rating: 2
You have to understand what they are trying to do with Windows 8 though. They are desperately trying to remain relevant as a consumer level solution.

They have the enterprise level desktop computing locked up. And I don't see that changing. But they have always wanted in on tablets, and the "casual" user has changed from desktops, to notebooks, to now tablets in their interest.

I agree they haven't handled that well, but I don't know who would have. I go back and forth in my thinking. Between the thought that they should have kept the tablet and phone OS separate from the desktop OS and never the twain shall meet, and the thought that maybe they have the right idea but just need to get it right. And that maybe 8.1 will get it right.

One thing I will definitely agree on, is that they have a problem with crusty old white dudes in suits trying to drive development in a market they don't seem to understand. The Xbox One was very painfully cringeworthy in that respect.

I really don't know where things will be in 10 years, but with the rise of google, android and chrome OS it could be a very different landscape.

RE: Here's your plan:
By Motoman on 6/25/2013 12:42:06 PM , Rating: 2
You have to understand what they are trying to do with Windows 8 though.

They're the ones who need to understand what they're trying to do with Win8.

They can have a *single* OS that covers tablets and PCs that offers a different primary UI. That's really as simple as it needs to be. There's not the slightest reason why they couldn't have put out Win8 with the tile interface default for tablets, and the Start menu/desktop for PCs. No reason at all.

And they'd have avoided ALL of the BS, and Win8's part in the PC sales decline, so on and so forth.

But they just had to be stupid and go and f%ck it up.

I don't hold out great expectations for 8.1. From what we've seen so far, it's little more than a cruel hoax. Start8 and other utilities will continue to be in high demand...and Win8 in general will continue to be in low demand.

RE: Here's your plan:
By Breakfast Susej on 6/25/2013 2:36:44 PM , Rating: 2
Microsoft seems to subscribe to the notion that if they can just force people to try something they think is better, people will come around.

But really this is nothing new. They have been doing this all along, and they have had hits and misses. They have always been arguably arrogant in their design decisions.

Windows 8 really takes me back more than anything to the days of Dos and the arrival of win95. It reminds me a lot of that. 95 was this conglomeration of Dos and Windows where you still needed to use both and they were two entities mashed together that didn't really work together.

The metro UI and the desktop are pretty well the same thing to me. Two entities that do not work well together and Microsoft is banking that if they can just get people to see how great they feel the metro UI is that it will win them over in the end the way windows95 eventually forced it's way in and pushed the dos users to adapt to it.

But yes, Microsoft has forgotten perhaps that this is not 1995 any longer, and that the casual home user isn't really dependant on them in any way. So how this plays out for them in the end is yet to be determined.

I don't feel that metro and the desktop belong together either. It just doesn't work. I use windows 8, and while I like many things about it, I never even see the metro UI. I played with it, tried it out, gave it a chance. But in the end I installed start8 and now I never see it. And I'm pretty content with windows 8 as it sits with start8 installed.

So whether there is a good reason or not, Microsoft seems to think there is, and they seem intent on forcing people to see how wonderful metro is and adopt it on the PC. I don't think that's ever going to happen either, but this seems to be their take as far as I can tell.

"A lot of people pay zero for the cellphone ... That's what it's worth." -- Apple Chief Operating Officer Timothy Cook

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