MS reorg – so how many divisions was that?

Yesterday's Microsoft reorganisation announcement was strangely confused. It refers to two divisions (business and enterprise, and consumer Windows) and three groups (business productivity, developer and consumer and commerce). In addition there is a home and retail products group that is said to "operate outside of the four core business divisions" - but, er, Microsoft has only named two divisions. The only other significant changes to our earlier story (Earlier Story) is that Jim Allchin's responsibilities cover two divisions (to fit the confused Microsoft structure, this should in effect put Allchin in charge of a group). Bob Muglia gets business productivity (applications), Paul Maritz seems happy with a lesser role, looking after developers, while Brad Chase gets the consumer stuff including MSN, shared with Jon DeVaan. The home/retail appendage (games, input devices - mice, keyboards, joysticks - and reference products such as Encarta) will be headed by Robbie Bach and Rick Thompson. Another change is the scrapping of the executive committee and the formation of a business leadership team that will meet Gates and Ballmer once a month. This consists of Jim Allchin, Orlando Ayala, Brad Chase, Jon DeVaan, Bob Herbold, Joachim Kempin, Greg Maffei, Paul Maritz, Mich Matthews, Bob Muglia, Bill Neukom, and Jeff Raikes. There were several promotions, including Mich Matthews, a key player who has been long-overlooked, to be VP, public relations; Greg Maffei, CFO also becomes senior VP finance and administration, with additional responsibilities for procurement (strange that he did not earlier control this) and real estate. Seven additional VPs were created. One mystery has been the delay in the announcement, which was expected two weeks ago. It now seems likely that Gates did not want any such events to overshadow his book promotion activities. Gates took part with Ballmer in the conference call yesterday after the announcement. There was also a need to save up some news to detract from today's status hearing in the trial, when it is expected that a provisional date for resumption will be announced. Judge Jackson is unlikely to see the reorganisation as being related to the trial. It is known that Ballmer has been mulling over these changes for some time, and there is nothing that indicates that they have anything to do with shaping Microsoft for a voluntary or compulsory breakup. Indeed, as our interview with Sun CEO Scott McNealy last week suggested, there is no need to split Microsoft to ensure competition. McNealy's solution is to stop Microsoft's acquisitions, which would be far more practical and effective, since Microsoft's "innovation" results from products that have been acquired or copied from others. Ballmer did bellow away that he would not find any breakup of the company acceptable, but it's not his call. The role of Brad Silverberg, who is believed to be unhappy at Allchin having such broad responsibility in view of Silverberg's work on launching Windows 95, had been uncertain. Ballmer said that Silverberg wanted a more unstructured lifestyle, and is returning from his long leave of absence to assist Ballmer. ®