Microsoft has outlined its long anticipated restructuring plan, which it hopes will position the company for growth over the next 10 to 15 years.
As expected, the software giant is splitting itself into six divisions that target specific customer groups. The Business and Enterprise Division will be headed by Jim Allchin, the Consumer Windows Division by David Cole, and the Business Productivity Group by Bob Muglia.
The Developer Group will come under the remit Paul Maritz, the Consumer and Commerce Group will be jointly lead by Brad Chase and Jon DeVaan, and the Home and Retail Products Division will sit under Robbie Bach.
Microsoft is also replacing its current Executive Committee with a Business Leadership Team of senior executives who will meet with Bill Gates, the firm?s chairman and chief executive, and Steve Ballmer, its president, for a full day each month. Gates and Ballmer will retain their current posts and focus on "cross cutting" issues.
Ballmer said the reorganisation resulted from a review of Microsoft?s structure that he undertook on becoming president in July 1998. "We need to get business divisions that really have a very broad charter, and have the sales, marketing and development resources to do their jobs in a very effective way, with full responsibility and accountability," he explained.
But he particularly stressed the importance of the new Consumer Windows division, which will focus on "the renewal of the PC," by aiming to make it more stable and easier to use.
The unit will crank out a new release of Windows every year in time for the Christmas season, starting this year with a minor update to Windows 98 that is being dubbed Windows 98 Second Edition.
A major Windows upgrade will follow in 2000, and another one in 2001. Ballmer did not clarify, however, whether these upgrades would be based on Windows 98 or Windows NT source code.
But he vehemently denied that the restructuring was a prelude to a break up of the company either voluntarily or as a result of Government pressure.
"We want to get more parallellism [between the divisions], but we still see a lot of synergy in what we are doing across these divisions," he said.
While analysts generally reacted favourably to the restructuring, some were not convinced that the measures were enough to turn Microsoft into a socalled customer oriented organisation.
Chris LeTocq, a Dataquest analyst, said: "[Microsoft] is still headed up by product people who come from the old organisation. This is just a first step."
But Rob Enderle, an analyst with Giga Information Group, claimed: "I was a little surprised that Jim Allchin retained as much of the control as he had. He was part of the problem in the old organisation, and he remains very powerful."
He added that Microsoft had failed to attract a top tier figure to head its Consumer and Commerce Group, which includes the MSN portal site, but the current structure, with Brad Chase and Jon DeVaan sharing responsibility for the area, was unlikely to survive for long. "You need a clear leader," he said. Early rumours had suggested that Microsoft veteran Brad Silverberg, who has been on leave from Microsoft for two years, would head it up, but it was announced on Monday that he will simply return as an "advisor" to Ballmer.
"I?m happy to have Brad back as a member of the core management of the company," Ballmer said.
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