Watson, whose brief includes oversight of Microsoft's security strategy and operational activities in Australia and New Zealand, has more than 15 years experience in information security and audit roles. He will report directly to Microsoft Australia managing director Steve Vamos.
His appointment comes just days after Microsoft's United Kingdom operation announced it was taking on former Federal Bureau of Investigation special agent Edward Gibson as its chief security advisor.
Watson has left IBM to join Microsoft. Prior to his stint at Big Blue, the new appointee worked for Arthur Andersen, Bank of Melbourne, Ansett Transport Industries and Coles Myer.
"Security is a top priority for Microsoft," said Vamos. "We are pleased that someone of Peter's standing is joining us".
Microsoft has come under heavy fire over the security of its products and has run several seminars nationally over the past couple of years to educate its user base on ways of safeguarding their information technology infrastructure. The company last week hit back at some of its most trenchant critics by releasing research that claimed Windows software was cheaper to patch than open-source alternatives.