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Here's a breakdown of Steve Ballmer's ambitious reorganization

Microsoft Corp. (MSFT) in many ways stands at a crossroads.  While still producing the world's most used personal computer operating system for traditional PCs, Microsoft has been surpassed in revenue and profit by boutique gadget maker Apple, Inc. (AAPL) and may soon be surpassed in OS market share by Google Inc. (GOOG) when a lose definition of what a "PC" is, is adopted.

Apple ranked #1 in accounting firm PricewaterhouseCoopers's 2008-2013 listing of the top 100 companies, while Google slotted in at #3.  Microsoft slid to #9.   The key to both Apple and Google's success is mobility and Microsoft is determined to be more focused on mobile.  Moreover, both Google and Apple had cleaner, more streamlined management than Microsoft did -- as of earlier this week.

But Microsoft CEO Steve Ballmer is determined to reignite the spark at Microsoft, and is willing to basically tear apart the entire company, including its leadership ranks and reassemble it into a better design.

In a press release Mr. Ballmer describes his "big vision" for Microsoft in a "fast-changing world".  He writes:
 

We are rallying behind a single strategy as one company — not a collection of divisional strategies. Although we will deliver multiple devices and services to execute and monetize the strategy, the single core strategy will drive us to set shared goals for everything we do. We will see our product line holistically, not as a set of islands. We will allocate resources and build devices and services that provide compelling, integrated experiences across the many screens in our lives, with maximum return to shareholders. All parts of the company will share and contribute to the success of core offerings, like Windows, Windows Phone, Xbox, Surface, Office 365 and our EA offer, Bing, Skype, Dynamics, Azure and our servers. All parts of the company will contribute to activating high-value experiences for our customers.

In an effort to reposition itself as a devices and services company, Microsoft is consolidating it's entire structure.  It's new major divisions are:
  • Engineering (including supply chain and datacenters)
  • Marketing
  • Business Development and Evangelism
  • Advanced Strategy and Research
  • Finance
  • HR
  • Legal
  • COO (including field, support, commercial operations and IT)

Engineering in turn is broken down into four units, plus one minor unit (Microsoft Dynamics, a client relations management (CRM) and enterprise resource planning (ERP) software seller).  The engineering subunits are:
  • OS
  • Apps
  • Cloud
  • Devices
With that in mind, here's the new leadership of Microsoft (people with new or expanded roles are colored; unchanged are gray).  Note that the only people out of the top ranks are Kurt Delbene (who is retiring from his role as Office President) and Don Mattrick (departed to become CEO of Zynga Inc. (ZNGA)).


Steve Ballmer

Steve Ballmer - (returning) CEO

Steve Ballmer has been CEO since Bill Gates stepped down in Jan. 2000.  He's seen the company through major hits -- Windows XP and Windows 7 -- plus some controversial "misses" -- Windows Vista and Windows 8.  He masterminded the reorganization with the help of close friend, Ford Motor Comp. (F) CEO Alan Mulally.  




 

Microsoft's COO
B. Kevin Turner - (returning) COO


Mr. Turner is a star of the business world, and was considered a brilliant acquisition for Microsoft back in 2005.  A true self-made multi-millionaire, Mr. Turner worked as a Cashier at Wal-Mart Stores, Inc. (WMT) while going through college.  He would rise through the management ranks to be appointed President and CEO of Wal-Mart bulk retail subsidiary Sam's Club at 29.  That made him the youngest corporate officer ever at Wal-Mart.

In 2005 he accepted an offer to become COO at Microsoft, a post that had gone unfilled for three years.  At Microsoft Mr. Turner's biggest function has been driving license sales, a function that he has performed reasonably well.  

Some are wary that Microsoft may lose Mr. Turner to some rising star looking for a chief executive, or alternatively he might jump ship to launch his own investment group.  Currently in his ninth year at Microsoft, Mr. Turner is actually the longest standing COO in Microsoft history (the previous record was set by Microsoft's first COO, John Shirley, who lasted eight years.

COOs at Microsoft have a tendency to jump ship; the previous COO Richard Belluzzo last only 14 months, while Bob Herbold left in 2001 due to retirement, having held the reigns for 7 years. Before that there was John A. Shirley ('83-90) and Michael Hallman ('90-92) [source].

 
Microsoft reorgAmy Hood - (returning*) CFO

Ms. Hood came to Microsoft after an managerial/executive stint at Goldman Sachs Group Inc. (GS) back in 2002.  At Microsoft she spent most of her time thus far serving as the divisional CFO of the business unit.  In May 2013 she was called up to become the company-wide CFO after Peter Klein stepped down. 

Under the reorginization (*) Ms. Hood's role is greatly expanded, as she now will oversee all financial efforts for various divisions, other than the business-oriented Sales Marketing & Services Group (SMSG), which Mr. Turner personally oversees.  This shakeup presumabely elminates the divisional CFOs that once existed, while merging finance lower level managers, executives, and employees for various units into a single unit.




Terry MyersonTerry Myerson - (new) Windows EVP

After heading up the Windows Phone effort, Mr. Myerson now finds himself in charge of heading the design of both Windows Phone and Windows.  On the one hand this seems troubling due to Windows Phone's failure to make a major impact.  On the other hand Windows Phone is beloved by most of its small but growing user base, and the low market share arguably is due to the horrible design stall that occurred during the Windows Mobile era.

This move arguably also makes sense in that Microsoft is bring its user interface and code base of its mobile and PC operating systems much closer together with its next release, Windows/Windows Phone 8.1.  Given how poorly received Windows 8 was, Mr. Myerson will have to figure out a way to backtrack on some changes, tweak others, and in general better retrain users to use the new Windows UI.

Tami Reller

Tami Reller
 - (new) Marketing EVP

After overseeing the Windows division through its arguably worst marketed effort (other than perhaps Vista) in recent years (Windows 8) Tami Reller now gets the questionable nod to direct all of Microsoft's marketing.  The good news is that Ms. Reller is a relative "young" face in the executive world (age: 47) and has bold ideas about reinventing Microsoft as a more chic, recognizable brand.  The bad news is that the results have thus far been confused.  Microsoft's marketing definitely seems to be headed in the desired direction, but it lacks the cohesion to sell customers on Microsoft's radical redesign.  It should be interesting to see whether Ms. Reller turns the corner now that she's been handed a bigger role.

Qi LuQi Lu - (new) App. and Services EVP

Microsoft's online efforts -- from Bing to MSN -- have gone nowhere and bled massive lumps of cash.  It's unclear why Microsoft would put the man behind these losses in charge of lucrative products like Microsoft Office.  Clearly Mr. Lu is popular at Microsoft, but installing him at this critical post has a serious possibility of badly backfiring.  That said, Mr. Lu will have the deck stacked in his favor this time around; Microsoft never had significant search market share, but its Office Suite enjoys strong dominance of the (paid) productivity software market.




Lisa BrummelLisa Brummel - (returning) HR Group EVP

It's a bit hard to evaluate Ms. Brummel's performance from an outside perspective, but CEO Steve Ballmer seems happy enough with her, so that's a good sign. Ms. Brummel is a veteran leader, having held her current role since May 2005.  While she doesn't have any major new responsibilities, the massive reorganization should be keeping her incredibly busy the next several months.







Brad Smith - (returning) Legal and Corporate Affairs EVP

Brad Smith

Again, not much new here, but Mr. Smith has his work cut out adapting to the new layout of Microsoft.


Julie Larson GreenJulie Larson-Green - (new) Devices and Studios EVP

The woman behind some controversial changes -- such as the addition of the "Ribbon" UI element to Microsoft Office and Metro (under Steven Sinofsky).  This is the latest promotion for the rising star, who last November became Windows engineering President.  Of all the risers at Microsoft, Ms. Larson-Green arguably has jumped the farthest within Microsoft's internal ranks.

While her work hasn't always been well received by customers she's highly driven.  At a May conference, she was asked whether she might be in contention to one day become CEO (given that her successor Steven Sinofsky was considered CEO Ballmer's heir-apparent).  She responded, "I wouldn’t rule it out, but I’m not in a hurry.  Give me a year and ask me again."

The fact that CEO Ballmer lives with that kind of talk and even promoted her shows how strong her growing grip on Microsoft is.  If Mr. Ballmer slips or decides to retire, Ms. Larson-Green may seem the most likely to take his place.

That said, this "promotion" comes is less of a gift than it looks.  Microsoft's hardware efforts are presently in disarray -- the Xbox One has become the whipping boy of games fans due to its fizzled DRM bid, while Surface has fallen short in sales.  Her oddest new responsibility is Microsoft Studios.  It is puzzling why Microsoft didn't put this unit under Qi Lu (given that it's essentially apps).  Perhaps the Xbox hardware/software bonds were too tight to break, or perhaps this was a bit of a relief for Ms. Larson-Green given the Studios' success.

Of all the new roles, Ms. Larson-Green's is arguably the most simultaneously confusing and intriguing.  Mr. Ballmer didn't punish the rising star for her chutzpah, but he is forcing her to live up to her hype.  If the Xbox and Surface brands flourish she will likely be Microsoft CEO one day; if they continue their negative trajectory Mr. Ballmer may have cause to send her back down the ranks.


Kirill TatarinovKirill Tatarinov - (returning) Business Solutions EVP

Microsoft made a wise decision not demoting Mr. Tatarinov, as rumor had stated.  The business unit has flourished under his quiet, but deliberate leadership.  Under his command, the unit should continue to be a virtually guaranteed top revenue driver amid a balance sheet of uncertainties.



 
Tony BatesTony Bates - (new) Business Development & Evangelism EVP

A pickup from the Skype acquisition, Mr. Bates was talented enough to deserve a broader role.  In some ways his role seems to overlap with Ms. Reller's and Mr. Turner's.  Where Mr. Bates steps in when it comes to "evangelizing" (marketing) various Microsoft products will be something to watch.








Microsoft ReorgEric Rudder - (new) Adv. Research and Strategy EVP

Apparently Microsoft decided to bump the "chief" off Mr. Rudder's title, seemingly bumping him down a notch to EVP.  Whether this reflects some failing on his part, issues with Mr. Ballmer, or just semantics is unclear.  Aside from the title change, though, Microsoft is handing him a star role; his post could be viewed somewhat like the former "Chief Software Architect" post in that it sweeps across multiple engineering divisions.  In that light what looks like a demotion may actually be a bump of sorts.

Source: Microsoft



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By Argon18 on 7/12/2013 3:28:05 PM , Rating: 1
Huh? You don't keep up with developing countries IT initiatives too well, do you. Developing countries don't want to pay the Microsoft tax. They are diving hard into Linux.

OLPC in Africa uses Linux, India and China are serious Linux users, developing their own Linux distro's even (Red Flag Linux, for example). Not to mention that Anti-American sentiment in many developing countries is driving them away from Microsoft, and towards home-grown Linux solutions.

Lastly you've got Android, which is of course Linux, and is the dominant ARM platform operating system for mobile devices all over the world. More and more tablet and pseudo laptop tablet devices emerge based on ARM/Android are displacing more expensive Wintel solutions, especially in developing countries.


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