Microsoft revamps to excel past performance

Microsoft is rebooting its corporate operations effectively downsizing seven business divisions into just three, so it can respond more quickly to the competitive threat posed by the likes of Google, Yahoo and Oracle.



The announcement came in response to internal and external criticism that the world's largest software company, which boasts 60,000 employees, is failing to keep pace with its rivals' rapid rate of new releases, because it first has to penetrate layers of corporate bureaucracy.



Under the revamp, Steve Ballmer says decisions once reserved for Bill Gates will no longer be taken from the helm, given the appointment of three new Presidents to head the scaled down Redmond divisions.



According to the Microsoft no.2, the slimline approach will enhance decision-making and give the company "greater agility," as well as delivering the types of products customers want the most.



Expectantly each division is more recognisable by the ubiquitous Microsoft products within, rather than the newly designated names resulting from the merger of separate departments.



The Platform Products and Services business stands tall with MSN & Windows, the Business division fronts corporate offerings and software, like Office, and the Entertainment and Devices division is readily identifiable by the Xbox360.



Alongside Jim Allrich and Kevin Johnson, who will jointly head the Platforms division, and supporting Robbie Bach as Entertainment head as well as Jeff Raikes as the president of Microsoft Business, will be Ray Ozzie, who will oversee all three divisions and take charge of Web-based services.



The long-serving software veteran who pioneered Lotus Notes enjoys a new expanded role as Microsoft's chief technical officer, in which he will drive its software services strategy and potentially take responsibility for releasing new versions of Windows, including its flagship security tool, Microsoft Update.



A streamlined Microsoft also sees the enhanced involvement of .Net champion, Eric Rudder, who will report directly to Bill Gates on overall technical strategy after the pipeline offerings of Visual Studio and SQL Server 2005 are unveiled.



Moving in the opposite direction is Jim Allchin, the media-vocal Windows developer who will hang up his developments at the end of next year after Windows Vista becomes commercially available.



Beyond the corporate reshuffle, consumers and professionals can expect a "new era of opportunity…by weaving both software and services into…the changing needs of our customers' digital lifestyles and the new world of work."



Behind the scenes, such a pledge will spark a new focus on encouraging developers to build applications with "the combination of software and software-based services", Ballmer said.



Exactly why the re-jig at Redmond has arrived, let alone so close after the software leader's 30th birthday, is not explicitly clear from Microsoft's press announcements, yet according to Ballmer it's unrelated to workforce morale.



"We have as an excited and engaged a team at Microsoft as I could possibly manage," he said, speaking to Business Week in a Q&A intended to fix a bad company image with the magazine.



"We have 85 per cent of our people say they feel strongly that they're proud to be at Microsoft."



Refusing to specify how this number is calculated, Ballmer answered that "regular analysis" keeps his finger firmly on the pulse of the corporation, adding that the 85 per cent figure was, "about as high as it has ever been."



Yesterday some Microsoft employees seemed to disagree, venting on a blog that the so-called "reorg" was long overdue, because, "it takes too many meetings to get things done" and "everyone has always felt underpaid."



The-14-year Microsoft loyalist said he started at the "glory days" when the company was beating Netscape, IBM & Novell.



"Everyone has always felt underpaid (even when the stock was going up), everyone has always complained that we are too big/stuffy, everyone has always felt that working across teams was too hard, everyone has always felt that the VPs are somewhat disconnected from the real world. And yes, 'BillG' has a history of being unpleasant to people in person over email. Kui-Fu Lee was just the latest example."



Another employee was simply relieved at the corporate reshuffle, reflecting, "I felt like we've at least been thrown a bone, Microsoft certainly needed a reorg [sik]."



The Mini-Microsoft blog also revealed concerns that in the past the company has suffered from an absence of "business savvy people," with the unnamed author appealing, "We need more… like Bill and Steve, not less."



Such criticisms will make welcome reading for the three new Presidents as well as chief executive, Steve Ballmer, who told interviewers: "We have a great culture that promotes criticism. I think that does fantastic things. We're always looking for everything everyone says to make sure that I'm doing what I need to do, and our leaders are doing what they need to do to continue to push the company to new heights. And you see that in the results."



He cited ever-increasing market share with .Net and SQL Server, and pointed out that Microsoft outsells Oracle and DB2 (IBM's database software) on unit volume combined, helping to achieve 70 per cent growth in profits within the last five years.