Microsoft reorganises, but will it settle?

Microsoft reorganises, but will it settle?

After weeks of speculation, Microsoft on Monday unveiled its new organisational structure, the first major initiative of Bill Gates' right-hand man Steve Ballmer in his new role as company president.

The reorganisation will split the company into four divisions focused on Microsoft's customer bases and will give those divisions greater autonomy, Gates and Ballmer said Monday in a conference call. The heads of each division are all longtime Microsoft executives, making the reorganisation more of a shuffle than a shakeup.

The new groups are a developer division, run by Paul Maritz; a business and enterprise division, run by Jim Allchin; a business productivity division run by Bob Muglia; and a consumer and commerce division run by Brad Chase and Jon DeVaan. A subdivision devoted to Windows 98 and its successors will be run by David Cole, who will report to Allchin.

At 38 years old, Chase and DeVaan are the youngest executives and the only ones without top-level management experience. Chase has risen quickly as the Windows and Internet Explorer marketing chief. DeVaan previously ran the Office group and is the latest executive to jump from the desktop application space to new media.

Allchin and Muglia effectively remain in the same positions as before: Allchin will oversee Windows 2000 and other network software, and Muglia leads the charge with desktop applications and other programs for workers in the office, at home and on the road. Maritz, who has helped guide many of the company's broad developments, is making the largest shift: his mandate is to make sure hardware and software developers continue to make Windows-based products for all manner of devices.

Each group is charged with submitting a business plan that could entail job cuts, but the company's total employment "will continue to rise modestly," Gates said.

The timing -- with the Justice Department seemingly close to scoring at least a first-round victory in its antitrust case against the software giant -- has some wondering whether the reorganisation is a response to pending government action.

When the question was raised by a reporter on Monday, Gates responded: "Absolutely not."

Ballmer's description of the "empowerment" of the new divisions emphasised independence from a centralised Microsoft power base. "I wouldn't say we're splitting ourselves into many small companies, but [we need to] make sure our business divisions behave like independent companies," said Ballmer. He and Gates will focus on issues that cut across the various product groups.

Microsoft and government prosecutors are planning to meet for settlement talks. When pressed, Gates said Microsoft's priorities are keeping Windows whole and being able to add features to it. He deemed any discussion beyond that "inappropriate".

Meanwhile, there are still unanswered questions about the reorganisation. Perhaps the biggest is who will really oversee the media and e-commerce properties as Microsoft moves to tie them to its software business. Brad Chase and Jon DeVaan are splitting the duties for now, but analysts say there's still room above them for a seasoned media or e-commerce executive. Microsoft has been looking outside for help since Pete Higgins stepped down from the old Interactive Media Group. One high-profile "no thanks" came from former Microsoft executive Brad Silverberg. He'll continue to advise the company but won't return full-time, Ballmer said.

The company Monday also announced an expanded "inner circle" of executives, dubbed the "Business Leadership Team", at the top decision-making level: in addition to Allchin, Ballmer, Chase, DeVaan, Maritz and Muglia, the group includes Senior VP Orlando Ayala, COO Bob Herbold, MSN Vice President Laura Jennings, Senior VP Joachim Kempin, CFO Greg Maffei, corporate PR chief Mich Mathews, head counsel Bill Neukom and sales and marketing VP Jeff Raikes.

Conspicuously missing from the Business Leadership Team is chief technology officer Nathan Myhrvold, who has long been a member of the company's executive committee.

In explaining Myhrvold's absence, Gates said, "The Business Leadership Team is about business. It's not an effective use of Nathan's time or [that of] any purely technically focused people."

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