Microsoft Announces Massive Reorg

Microsoft on Tuesday announced a broad reorganization of the company into three new divisions each headed by its own president. Current group vice president of platforms at Microsoft, Jim Allchin, also announced plans to retire by the end of 2006 - once Windows Vista is out the door.

The Microsoft Platform Products & Services Division will be comprised of the Windows Client, Server and Tools, and MSN product groups. Allchin will serve as co-president with Kevin Johnson until his retirement, when Johnson will take over.

"I speak for the entire Microsoft family when I say how proud and appreciative we are of Jim's immeasurable impact on our success as a company and on the millions of customers who are able to reach their potential everywhere using our software," said Microsoft CEO Steve Ballmer in a statement.

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"Jim is a key visionary and design architect who will help continue to lead us in the coming year."

Eric Rudder, current senior vice president of Server and Tools, will move out of the group and take a new position under Microsoft chairman and chief software architect Bill Gates following the launch of Visual Studio 2005 and SQL Server 2005 in November.

Jeff Raikes will become president of the Microsoft Business Division, which will combine the company's Information Worker business and Microsoft Business Solutions (MBS) - recently branded "Dynamics."

The new Entertainment and Devices Division merges Microsoft's current Home and Entertainment Group, which includes the Xbox, and the Mobile and Embedded Devices Division. Robbie Bach will serve as president of the new division, with current Mobile & Embedded senior vice president Pieter Knook reporting to Bach.

Microsoft CTO Ray Ozzie, meanwhile, will expand his role to drive the company's software-based services strategy across all three divisions, the company said.

In a statement, Allchin said he is still fully devoted to Microsoft, despite plans to retire. "My passion for Microsoft is as strong as ever. While I will call it a day at the end of next year after Windows Vista ships, I'm confident the world-class team of people I've been fortunate to work with will ensure we execute on our long-term mission," said Allchin.

"As we head into the next 18 months of amazing releases driven by innovation in each of these three core areas, we are more excited than ever about our ability to help individuals and organizations large and small reach their full potential," Ballmer added.

But Jupiter Research senior analyst and Microsoft Monitor author Joe Wilcox was skeptical of the change. "Microsoft's position is that the three groups will create more synergy among like divisions. It's unclear to me why another layer of bureaucracy is necessary to foster collaboration," Wilcox said.

"If Microsoft's premise is right, the new structure would better facilitate cross-product integration and improve product development. If Microsoft is wrong, the reorganization could slow down work in progress," Wilcox added. "My concern: That MSN will actually slow down its rapid-fire development, which in the past put it ahead of Windows with technologies like desktop search. I would caution Jim Allchin and Kevin Johnson about absorbing MSN into Windows development and thus killing off the innovation."

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