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Microsoft injects Windows 7 mojo into server biz

Shakeup freezes out PR droids, turns on engineers

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Microsoft's $14bn server and tools division is undergoing a massive reorganisation so that it's run more like Microsoft's Windows operation.

Sources tell The Reg S&T has shaken up line reporting by implementing the Windows group's triad system, which was considered crucial in bringing Windows 7 to market.

From now on, S&T directors have three line reports: developer, tester and program manager. The triad system was introduced to Microsoft in the Windows and Windows Live group by president Steven Sinofsky, and the shake-up has been described as the "Sinofskization" of Microsoft.

It's an approach that sharpens the focus on engineering and gives management greater control of development and delivery. It's an approach that also reduces the need for those without technical backgrounds who specialise in business or messaging. As such, our sources say S&T has frozen all hires in the marketing group run by chief Robert Wahbe - who is leaving Microsoft next month.

Our source estimates Wahbe leads nearly 500 people and reckons the decision not to fill posts would lead to an effective reduction of headcount of about 10 per cent.

The S&T marketing hiring ban, which can be described as "soft" redundancies, is seen internally as the harbinger of forthcoming actual layoffs. The freeze means vacant marketing positions won't be filled, so those remaining will be under pressure to meet existing targets with a reduced head count.

Wahbe's people were, based on his bio, responsible for S&T's worldwide product and business management – including product planning, pricing, packaging, branding and advertising, as well as developing sales integration and working with the partner ecosystem. They were responsible for creating messaging frameworks to help sell products including Windows Server and Visual Studio.

The S&T shake-up is believed to have taken place towards the end of 2011 and it emerged amid reports that Microsoft is planning job cuts. This is part of a radical re-shuffle of Microsoft's massive division responsible for communications advertising, public relations, events and packaging across the entire company – Microsoft's Central Marketing Group (CMG).

This tallies with what Bloomberg reported here about the more technical marketing workers being shifted to the engineering groups, with the less technical getting the chop.

Microsoft would not comment on the S&T re-organisation.

The revamp is designed to cut down on job duplication and, it's believed, is intended to make Microsoft more of a product-led company. Our source told us: "There's a lot of redundancy in marketing, even in the product group."

The changes, especially the hiring freeze, are remarkable given Microsoft is actually profitable and has seen its business grow – therefore there was little pressure to cut.

The change is even more surprising because Bill Gates once declared there would be no layoffs at Microsoft. That principle was broken in January 2009 with 5,000 company-wide cuts, which saw numerous smaller projects axed.

The decision to put a hold on marketing and to elevate product and engineering will change Microsoft's DNA in the long run. It comes as Microsoft has been on a tear to recruit more graduate-level engineers to its ranks to make Microsoft cool again.

The downgrade of marketing and the ascendance of engineering and product people comes as one of the people from the latter group, Chris Capossela, the former Office marketing chief, took over CMG from life-long PR specialist Mich Mathews.

There will be little love lost for marketing in general and CMG as a whole. Our source recounts stories of an operation somewhere between bureaucracy and a middleman that created a role for itself: you had pay to work for them while it also funnelled payments to contractors you'd hired. There also existed a culture of where those effective at communication would get ahead even though their actual product contributions were small. ®

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