Microsoft folds its Interoperability Strategy team into new subsidiary

Microsoft has created a new wholly owned subsidiary that will focus on working with the open-source community.
Written by Mary Jo Foley, Senior Contributing Editor

Microsoft is moving its Interoperability Strategy team into a new, wholly-owned subsidiary, the company announced on April 12.

The new group, known as Microsoft Open Technologies Inc., will be headed by Jean Paoli, who is currently the general manager of the team. It will be comprised of about 50 to 75 full-time and part-time employees and contractors. A board consisting of Microsoft managers from other business units will oversee the new entity.

Paoli said in a blog post on the Microsoft Port 25 blog that the idea behind the creation of the new subsidiary is to facilitate Microsoft's relationships with the open-source community and developers. He said the new structure will make it easier and faster for Microsoft to iterate and participate in grass-roots efforts and work with the community.

At the same time, Paoli emphasized that individual teams at Microsoft will continue to work with open-source vendors and developers; Microsoft Open Technologies won't be the only conduit for Microsoft's relationship with the open-source world or with groups like the Outercurve Foundation (the former Microsoft Codeplex Foundation unit) and the Apache Software Foundation.

From Paoli's blog post:

"The (Open Technologies) subsidiary provides a new way of engaging in a more clearly defined manner. This new structure will help facilitate the interaction between Microsoft’s proprietary development processes and the company’s open innovation efforts and relationships with open source and open standards communities."

A Microsoft spokesperson said that this is not a first or an unusual arrangement and that Microsoft has many wholly owned subsidiaries. (I'm trying to come up with a few to offer as examples. Anyone?) Update: It seems some of Microsoft's acquisitions, like Great Plains, Sybari Software and PlaceWare, at least at some point in their history, also have been wholly-owned Microsoft subsidiaries.)

What do you think of this latest move by Microsoft? Any additional thoughts/guesses as to why it might be advantageous for the Redmondians to make its Interoperability team a separate entity?

Update No. 2: A few folks have weighed in with thoughts on why the Softies might have gone the wholly owned subsidiary route with this.

IDC analyst Al Hilwa noted that many companies organize parts of their operations as subsidiaries. "A classic example is geographic operations of larger companies.Microsoft does that with its sales organization for example. The benefit of a subsidiary structure is providing a level of isolation, autonomy and legal protection. In this case, it is likely about engaging more and faster with open source, potentially with less extensive legal review of every action," he said.

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