Microsoft aims to 'reinvent' itself

"This has nothing to do with any lawsuit," Microsoft CEO Bill Gates told press and analysts on a conference call about the reorganisation. He and company President Steve Ballmer both reiterated that the new structure, instead, is aimed at bringing more "parallelism" and customer focus to Microsoft, and is not in anticipation of changes advocated by the DoJ and 19 state attorneys general with whom Microsoft is engaged in an antitrust lawsuit.

Ballmer characterised the move as part of Microsoft's plan for "renewal of the vision of our company." He said in order to "continue to have great impact on people's lives," Microsoft needs to "reinvent the company."

Under the new structure, Microsoft will be comprised of six divisions, instead of the anticipated four, and a new Business Leadership Team which will replace the current Executive Committee inner circle. The company announced the formation of a Business and Enterprise division; Consumer Windows division; Business productivity group; Developer group; Consumer and commerce group; and Home and Retail Products division.

Microsoft also announced that former Internet Division head Brad Silverberg is "formally" returning to the company as an advisor to Ballmer. Microsoft had offered Silverberg a position heading up the company's new Consumer and Commerce group, which Silverberg turned down. Silverberg has been consulting informally with Microsoft since he took indefinite leave from the company in 1997.

As a result of the reorganisation, the company's inner circle of senior decision makers will grow from seven to 14. It will consist of a number of Executive Committee stalwarts, including Gates and Ballmer, as well as Bob Herbold, Microsoft's chief operating officer; Paul Maritz, now head of the Developer group; Jim Allchin, now head of the Business and enterprise division and Consumer Windows division; and Jeff Raikes, who currently is group vice president, sales and support. New additions to the Business Leadership Team include: Orlando Ayala, senior vice president; Brad Chase and Jon DeVaan, the joint managers of the new Consumer and Commerce group, Laura Jennings, MSN group vice president; Joachim Kempin, senior vice president, OEM sales; Greg Maffei, chief financial officer; Mich Mathews, vice president of public relations; Bob Muglia, head of the newly created Business productivity group; and Bill Neukom, chief counsel for the company.

Missing from the new inner circle is Nathan Myhrvold, Microsoft's chief technology officer. Microsoft officials cautioned press and analysts listening to a conference call announcing the reorganisation not to make much of Myhrvold's absence, however, claiming he has more important things to do with his time. The Wall Street Journal recently reported that Myhrvold and his brother, Microsoft Vice President Cameron Myhvold, were contemplating leaving the company. Microsoft and Nathan Myhrvold both denied the story.

"There are many more things in the next 15 to 20 years we need to do," said Ballmer. That's why Microsoft is dividing itself into business divisions with far-reaching sales, marketing and development charters, he explained. "Business divisions should be focused on a set of customers and be responsible for core products."

It was unclear from the announcement where some of Microsoft's current top brass will fit into the existing structure. The company made no mention of how its current sales and support group -- headed to date by Raikes -- will be accommodated in the restructured Microsoft. The sales and support group administers sales and marketing programs involving the company's reseller and ISV partners. No mention was made of where OEM sales and/or Microsoft Research will fit into the new org chart, either.

Some users and ISVs registered the announcement as a mere blip, more suitable for water cooler chatter than serious boardroom review. "I've got to tell you, we haven't been too concerned one way or the other," said the CIO of a larger corporation that has heavily invested in Microsoft. "It's hard to see how this will affect us, truthfully.

"In a lot of ways, I think it's a natural changing of the guard," the CIO added. "Ballmer has a lot of lieutenants he has to keep happy, and you don't do that by favouring the developer side of the house. Money won't motivate them. Control and freedom [within their divisions] are probably the only way you can keep them motivated."