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MS reorg – Gates burnt out, so spin him off?

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Later today Microsoft is expected to announce its latest reorganisation. Normally these happen every couple of years, but the last significant one followed the panic December 1995 move when Microsoft finally realised that the Internet boat was sailing out of the harbour and that it was not on board. Gates really has left the running of the company to Steve Ballmer since he was appointed president, and is now concentrating on soaking up what in Mafia circles has been called "respect" as he floats around the world making sales calls on world leaders. There is every sign that he is burnt out and is far from being the formidable hands-on executive he once was. Meanwhile, Microsoft is experiencing not unexpected difficulties in attracting and keeping high-calibre executives. It is hard to motivate zillionaires who have no need for money and are only there for the power and the sycophantic ego stroking that is associated. The cash tends to burn a hole in their pockets, so much of their energy is devoted to spending it, rather than keeping up to date with developments in the industry like we mere mortals. The Microsoft trial showed just how pitifully ill-informed many senior Microsoft execs are. Today is expected to see the announcement of four divisions: an enterprise unit (Windows), and an applications unit (Office) will be relatively unchanged. A developers unit and a consumer unit will also be formed. Jim Allchin is expected to continue heading up Windows operations, which may accelerate Microsoft's downfall, since Windows under his stewardship has produced some truly flaky products. Robert Muglia will probably keep control of an applications unit. Paul Maritz, regarded as number three at Microsoft, is tipped for fewer responsibilities in a new developers' division. This appears to be a demotion on the face of it, but it could well be that he is tired of working so hard and fancies a lighter load (at least that's what his chums are saying). The consumer division, aka interactive media (aka IMG, which The Register's dodgy old hippies recall as the International Marxist Group - Ed), is said to be underperforming, but it could be that it has peaked and that nobody much wants its products, and that msn.com is just another portal. Microsoft has been trawling for a new consumer leader (employing the aptly named Heidrick and Struggles to act as headhunters). Executives from Disney, Excite and Yahoo are said to have said "no thanks". The current view is that Jon deVaan (in charge of Office) and Brad Chase (launcher of Windows 95 and IE) will share the responsibility - but being labeled as unsuitable for the top job will not please Chase. The job became available when Pete Higgins said last year that he was taking a leave of absence, although this is now also being described as a resignation. Brad Silverberg was almost certainly offered the job, but he had already tasted freedom and evidently likes it. He had wanted Allchin's job, and departed on his walkabout (ride about, actually, on a bicycle in Canada). Ballmer apparently decided against spinning off msn.com. Microsoft claimed last week that it had quadrupled its revenue in the last year, which shows just how small it must be. Microsoft has been very careful to keep the actual amount of haemorrhage secret. Microsoft will increasingly find it difficult to keep its senior executives sufficiently motivated, but perhaps it does not care much, providing they do not join rivals and teach them Microsoft's tricks. It is most unlikely that the reorganisation bears any relationship to the Microsoft trial. Although the breaking of Microsoft's into Babysofts is a favourite remedy of the less-informed, it would be unlikely to be successful as a means of dealing with Microsoft's behaviour. So far as Ballmer is concerned, he was never anything but a salesman and cheerleader, and there is every sign that he likes the power of his new job, so will stay around. It would be a smart move for Microsoft itself to do some real restructuring, and perhaps push out Gates to some charitable pasture. This is the kind of move that could convince the DoJ that Microsoft was willing to reform -- at least a little. ®

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