Microsoft's Steve Ballmer has announced in an internal email that Bob Mulgia, head of the Server and Tools business unit (STB), is to leave Microsoft in the summer after 23 years at the company. In the memo, published on the Wall Street Journal's All Things Digital site, Ballmer says:
"The best time to think about change is when you are in a position of strength, and that’s where we are today with STB – leading the server business, successful with our developer tools, and poised to lead the rapidly emerging cloud future. Bob Muglia and I have been talking about the overall business and what is needed to accelerate our growth. In this context, I have decided that now is the time to put new leadership in place for STB. This is simply recognition that all businesses go through cycles and need new and different talent to manage through those cycles. Bob has been a phenomenal partner throughout this process, and he and his leadership team have the right strategy in place.
"In conjunction with this leadership change, Bob has decided to leave Microsoft this summer. He will continue to actively run STB as I conduct an internal and external search for the new leader. Bob will onboard the new leader and will also complete additional projects for me."
In an emailed reply, published at Mary J Foley's blog All About Microsoft, Muglia focuses on the integrity of his leadership before adding:
"As a leader at Microsoft, I have a responsibility for delivering results to our shareholders. STB has performed well – with revenue growing from $9.7B in 2006 before I took over, to $14.9B reported last July, and operating income climbing from $3B to $5.5B over the same period. That’s over a 50% increase in revenue with a near doubling in income. That growth continued during the first quarter of our FY11. There are few organizations in the industry who have demonstrated the same results."
STB is a $15 billion-a-year business, and it's now Microsoft's third-largest unit after Windows and the Microsoft Business Division (mainly Office), both of which have more than $18 billion in revenues. And, it should be said, Muglia has achieved this financial success in spite of having to compete with free GNU/Linux in the server business, MySQL, and two of the industry's biggest and most vicious competitors: Oracle and IBM.
It's not clear why Ballmer has decided that Muglia is no longer the best man for the job, because he was making all the right noises about "cloud computing". If there was a dispute about the overall strategy, it would only have been the difference between Muglia's apparently keen (on cloud computing) and Ballmer's "very keen". However, it might be that Ballmer wanted to get a younger and more aggressive guy to push Azure and cloud computing while worrying less about its impact on the traditional on-premise server businesses.
Microsoft will have lost at least six senior staff over the past year or so. As well as Muglia, these include software architect Ray Ozzie, Stephen Elop, who now runs Nokia, Robbie Bach and J Allard from the entertainment division, and chief financial officer Chris Liddell, who is now vice chairman and CFO at GM. However, there are thousands more where they came from....