From the WSJ:
December 6, 1999
Microsoft Reshuffles Executive Team;
Belluzzo to Direct Consumer Offerings
By DAVID BANK
Staff Reporter of THE WALL STREET JOURNAL
Microsoft Corp. reshuffled its executive team for the third time in 12
months, this time to consolidate nearly all of its consumer offerings under
Rick Belluzzo, the computer-industry veteran who joined the company
only three months ago.
The management changes continue Steve Ballmer's
efforts to overhaul the company for a new round of
competition in which software is increasingly
delivered as Web-based services for a wide range
of digital devices in addition to traditional personal
computers. Mr. Ballmer, Microsoft's president,
has been particularly focused on increasing the
"dollars per desktop" Microsoft receives from
small-business users and home consumers, which
have lagged far behind the company's revenue
from corporate users.
Mr. Ballmer also handed out a pile of promotions
to Microsoft loyalists in an effort to retain important managers in the face of
a rash of recent departures. Jim Allchin, head of the platforms group, and
Bob Muglia, head of the business-productivity group, were promoted to
group vice presidents; five executives moved up to senior vice president
and three others to vice president.
"People are wondering whether we're going to become a bank with 300
vice presidents," said one Microsoft executive, who asked not to be
identified. "We've historically been very stingy when it comes to titles. This
is the first time we've had such broad title inflation."
The reorganization comes in the midst of
negotiations aimed at settling the government's
antitrust suit against Microsoft, but executives
said the company's legal challenges played no
role in the realignment. The structure of the
new organization does suggest the outlines of a
possible divestiture, however, and prosecutors
were watching the company's moves closely.
That said, Microsoft remains adamantly
opposed to any breakup.
In the new organization, three groups will be targeted for particular
customer segments: consumers, software developers and "knowledge
workers." A fourth group, under Mr. Allchin, has been reconstituted as a
"platforms" group with a new Windows division that unites development
work on Microsoft's new business operating system, Windows 2000, with
the successor to Windows 98 software, now dubbed Millennium. Brian
Valentine, who was in charge of Windows 2000, will now head all
Windows development. The Platforms group also includes a streaming
media division to develop Internet audio and video technology.
Mr. Allchin said the changes in the Windows organization don't reflect any
change in the company's operating system strategy. But they do reflect the
difficulty the company has faced in making the transition from Windows
98, based on older technology that goes back to MS-DOS, to the newer
software code that underlies Windows 2000. Windows 2000 is
considered more reliable, but less compatible with older software
applications and hardware peripherals. One reason Microsoft is eager to
make the shift: Windows 2000 fetches about twice the price of Windows
98.
The company said it plans to offer Millennium to
consumers next year as a relatively minor upgrade
to Windows 98, while continuing to push business
users to Windows 2000. Microsoft officials say
they are worried about confusing consumers: The
first beta, or test, version of Millennium was
released last month; Microsoft is gearing up for the
February launch of Windows 2000; and the
company will soon preview features of a future
consumer version of Windows 2000 code-named
Neptune.
Overall, Windows is declining in importance
relative to a new class of software services that combine the Web with the
capabilities of traditional PCs. In one sign, the leader of the Millennium
effort, David Cole, is moving to the consumer group to head a newly
formed "consumer services" unit. Mr. Cole will have responsibility for
communication features such as Hotmail and instant messaging, Internet
access and the development of a new "user interface" as all of Microsoft's
offerings take on the characteristics of Web-based services. The new
bCentral Web site, which includes the online version of Office, will move
to Mr. Muglia's business productivity group.
Shuffling the Deck
Microsoft reorganized its executive staff to strengthen its consumer software and
services offerings and streamline three other product groups:
Group/
Vice President
Business
Consumer/
Rick Belluzzo
Seven divisions, including a new 'consumer
services' unit for Rick Belluzzo Web-based
applications and Internet access; Home and
Retail; the MSN.com portal; WebTV and
cable set-top box efforts.
Platforms/
Jim Allchin
A Windows division that combines the
consumer and business Windows efforts and
the Streaming Media division for Internet
audio and video.
Business Productivity/
Bob Muglia
A new Small Business division, including an
Internet site that offers Office software as an
online service; other units include Office,
BackOffice and software for other devices.
Developer/
Paul Maritz
Tools and resources for software
programmers and SQL Server database
development.
The reorganization reflects the considerable responsibility Mr. Ballmer has
given Mr. Belluzzo, a veteran of Hewlett-Packard Co. and former chief
executive of Silicon Graphics Inc. who was recruited in September to head
Microsoft's Internet operations. That division has been recast as the
consumer group with responsibility for Microsoft's relationships with
consumer-electronics makers and cable-television operators. Mr. Belluzzo
also gained the home and retail division, which had functioned nearly as a
stand-alone company responsible for PC games and hardware as well as
all retail sales.
Mr. Belluzzo said Microsoft would seek to develop applications to drive
more everyday uses for computers in the home. For example, he said new
digital photography features utilize the PC, Web-based services and
communication technology such as e-mail. "We can redefine the home
better to anybody in the industry today," he said.
The latest reorganization is the third since Mr. Ballmer was named
president in July 1998. A minor shake-up in December of that year was
followed by a major reshuffle in March.
"I felt it was urgent that we do it," Mr. Belluzzo said. "Nobody likes reorgs.
I don't position reorgs as answers to problems. Now the work really
begins."
Write to David Bank at david.bank@wsj.com |
