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Microsoft re-org: more code, less death by PowerPoint?

End of the veteran managers

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Before we get too excited about reports of a major shuffle among Microsoft's top ranks, let's remember one thing.

Re-structurings are almost an annual sport for Microsoft.

But if Bloomberg is right, and a re-org is planned, then - based on what's been happening within the last year - what's coming promises to be a unique event in Microsoft's long history of re-orgs.

For the first time in a long time, Microsoft looks set to avoid simply shoving the same people in management around the organization, regardless of their talents or their veteran status. That's because there's been a gradual shake out of its veteran management class during the last year or so.

Losses among the top brass began in July 2008, with the exit - following, what else, a restructuring - of then platforms and services division chief Kevin Johnson after 16 years.

Last year, though, was when the attrition really gathered momentum, with "resignations" and disagreements over policy fueling talk of a brain drain away from Microsoft.

Entertainment and devices chief Robbie Bach who - with chief executive Steve Ballmer - misread the smart phone market went after 22 years. Server and tools president Muglia announced last month he's leaving after 23 years and following a disagreement with Ballmer who'd decided S&T needed new leadership that could make more money from cloud. J Allard, the man who created the Xbox and who reported to Bach, went too - after 19 years.

Even new blood was cut: Stephen Elop - who'd stewarded Office and business applications but wasn't otherwise particularly outstanding - went after just two years. Bill Gates' supposed replacement Ray Ozzie announced he was leaving after five years.

There have also been a string of other exits to Google, Facebook and Salesforce.com lower down and on the engineering side.

According to the playbook, Ballmer should have swapped in new group presidents for Bach, Elop and Muglia. He hasn't and, instead, we've had people with engineering pasts running the units within these groups and reporting to Ballmer.

For example, Kurt DelBene who oversaw engineering on Office is now president of Office but has not inherited Elop's title of president of Microsoft Business Division, that includes Office along with Microsoft's ERP and CRM software.

Andy Lees is now president of Microsoft's new Mobile Communications Business unit and Don Mattrick is president of the Interactive Entertainment Business unit, both reporting to Ballmer. Previously, both had reported to Bach.

We have yet to see a similar change applied to Muglia's S&T unit.

Either this is a new structure taking shape or we're in a holding pattern until a new structure is announced. If Bloomberg is right, then when we find out could be close at hand.

According to Bloomberg, Ballmer's about to "start" adding senior product executives with an engineering background to management.

You've always needed a knowledge of the technology and the product to succeed in management at Microsoft, even if you've not actually had hands-on coding experience.

What seems to be changing is the fact it's no longer enough to have been at Microsoft since the 1980s and 1990s. Then, Microsoft saw off rivals or had to come from behind using a combination of aggressive play combined with creative biz dev and marketing. For example, it took the revolutionary step of combining Word and Excel to create an Office suite.

Now Microsoft must again come from behind - in internet ads and search and in smart phones and tablets. This time, though, it looks like power is being devolved back to the engineers fighting new battles against tough technology rivals in an open standards world on the web. This, it seems, does not require those who waged the wars against Novell, Unix or Palm.

Also, it looks like Microsoft has been clearing house. J Allard, for example, was no code slouch and had a solid engineering background. He was once considered one of a crop of "Baby Bills" who'd end up running the company, but he stumbled badly on the Zune - Microsoft's answer to Apple's iPod.

With the old guard going, who fills this vacuum?

How about more of the old guard, only those with some serious engineering knowledge? Eric Rudder is a hard-core techie and the brains behind Midori, Microsoft's supposed post-Windows, managed-code operating system. He also predates Muglia running S&T - he was a senior vice president. Rudder - another one of those labeled a "Baby Bill" - served as Bill Gates' personal technical assistant between 1997 and 2001, longer than anybody else, and he helped to conceptualize and deliver .NET against Sun Microsystems' Java. Today, Rudder is Microsoft's senior vice president of technical strategy.

There's also a newer generation. Among them, cloud senior vice President Amitabh Srivastava who joined in 1997 but start Project Red Dog in 2006 that became the Windows Azure compute layer. Srivastava holds 14 patents and has published a number of different papers.

Are Rudder and Srivastava presidential material? Can Lees and Matrick remain as presidents with smaller areas of responsibility?

In the new Microsoft the answer might be "yes" as there seems to be an effort to re-calibrate management's antenna to filter new technology waves.

In the old Microsoft, the answer was "no". The new managers would have needed marketing and sales experience across different products before they could lead super groups spanning different products.

This old Microsoft, though, proved unable to conceive a ground breaking touch-screen smart phone or music player and was responsible for embarrassments like the Zune and the KIN phone instead. And how did an online book seller conceptually beat the world's largest software company and owner of MSDN and Visual Studio by being first to the cloud?

What happens next will depend on the positions Bloomberg's talking about. Also important is whether the current engineer presidents remain in charge of reduced empires on a permanent basis or whether this is a temporary phase.

Further, there's the Sinofsky question. Steven Sinofsky, president of Windows and Windows Live, put Office on reliable release schedules and delivered Windows 7. His reward for the latter was being named president of Windows and Windows Live. He's organized and in control, and he's also got a very strong background as a programmer. His bio, probably written by Sinofsky, is the only Microsoft group president's bio that specifically and deliberately mentions anything to do with code - C++ in this case.

What's next for Sinofsky? Running Windows Phone - currently with Lees - or Windows Server, which is part of the S&T group whose future has not yet been announced. Will S&T be decapitated like MBD and E&D and a lesser president like Srivastava appointed with servers along with Lees' clients going to Sinofsky? Depends how much overlap Microsoft wants in the Windows code base, especially when it comes to the PC and phone clients.

This won't be Microsoft's last re-organization, but it promises to be the company's most interesting - and significant - for some time. ®

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