Microsoft shuffles its deck

When announcing that he was looking to end working full-time in the job that has made him the richest man in the world, Bill Gates said in part it was because of a desire to be less in the limelight.

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By  Peter Branton Published  June 25, 2006

When announcing that he was looking to end working full-time in the job that has made him the richest man in the world, Bill Gates said in part it was because of a desire to be less in the limelight. “The world has had a tendency to focus a disproportionate amount of attention on me,” he admitted to journalists. By announcing plans to gradually step aside from the running of Microsoft, Gates may achieve his wish long-term, but in the short-term he has probably attracted more attention than ever. His departure isn’t happening anytime soon — he will still be a full-time Microsoft employee for the next two years — but the moment the announcement was made, industry observers were questioning what it would mean for the firm. The most immediate change is that Ray Ozzie, who joined the firm just last year when Microsoft acquired his company Groove Networks, will now become the man responsible for its technology leadership. He has taken over Gates’ former role as chief software architect, a post Gates took up in 2000 when he relinquished his responsibilities as CEO to Steve Ballmer. Ozzie will work alongside Craig Mundie, who was Microsoft’s chief technical officer and is now taking the newly-created role of chief research and strategy officer. Mundie will work closely with Gates over the next year as he assumes the latter’s responsibilities for Microsoft’s research and incubation efforts. Mundie will also partner with Brad Smith, Microsoft’s general counsel, on Microsoft’s intellectual property and technology policy efforts. While Microsoft said that Gates will be heavily involved in the transition period, a year from now both Ozzie and Mundie will be reporting directly to Ballmer. “Our business and technical leadership has never been stronger and Microsoft is well positioned for success in the years ahead. I feel very fortunate to have such great technical leaders like Ray and Craig at the company,” Gates said in the company’s formal statement. “I remain fully committed and full time at Microsoft through June 2008 and will be working side by side with Ray and Craig to ensure that a smooth transition occurs.” With Ballmer still continuing in the CEO role, Microsoft was last week keen to play down the impact on the business management team. “This is not a change to Microsoft per se, it is a change to the technical team,” said Bahaa Issa, corporate communications manager for Microsoft Gulf. Ozzie’s promotion was also not a complete surprise within the company, Issa suggested. “Ozzie is one of the top people at Microsoft today anyway, he is very much seen as one of the shining stars internally,” he claimed. Ozzie certainly has a formidable reputation: he is acknowledged as the inventor of the Lotus Notes groupware system, which is still used by millions of people today, and is seen as a guru in the collaboration space. He is however, something of a newcomer to Microsoft, having only joined the company when it acquired his firm Groove Networks last year (see IT Weekly 19-25 March 2005). As such, analysts have questioned if he will be able to achieve his goals in a company as large and entrenched as Microsoft has become. “Ozzie will need to demonstrate that he can motivate Microsoft’s engineering teams, particularly when cross-organisational architectural issues arise,” Gartner analysts David Smith and David Cearley wrote in an online advisory. “Ozzie must also demonstrate that he can be an effective change agent within a company as large as Microsoft,” the advisory continued. Ozzie has already made a key impact within the company, having played a key role in its focus on Web-based services. He was heavily involved in Microsoft’s announcement last year that it is to provide online-based versions of its flagship Windows Operating System (OS) and Office productivity tools (see IT Weekly 12- 18 November 2005). Gartner believes that Ozzie’s promotion to chief technology officer is a clear signal that Microsoft is pushing further to a Web-centric view. Ozzie is championing the “Live” strategy, which combines Microsoft’s software with software-as-a-service (SaaS) te- chnology. This strategic shift is widely seen as an attempt to head off the threat that competitors such as Google pose to Microsoft’s core Windows and Office franchises. While Microsoft can still claim to have formidable research capabilities, the firm is still hugely reliant on those two product families for the vast majority of its revenues. However, these revenue streams are under increasing threat, with the next-generation of the Windows OS, Vista, having been hit with interminable delays — full shipments are not expected until January next year at the earliest. Analyst firm Forrester has described Ozzie’s appointment as chief technology officer as “a great move” for Microsoft, seeing him as a “bona fide visionary”, however it also cautioned this month that the firm may yet regret losing the skills of the man he is replacing. “Gates’ departure will make it more difficult to attract and retain top talent at a time when people are already flocking to Google,” the firm said in an advisory on the Cnet newswire. “Gates has always been a magnet for elite computer-science talent. The best Microsoft development staff — distinguished engineers and technology fellows — went to Microsoft and stayed there after getting rich, in large part because they got to work with Bill. His departure from day-to-day work will leave a huge gap,” Forrester went on to state. While this is certainly true, the company’s record of technical leadership in the six years that he was chief software architect is actually fairly mixed. More than one observer has pointed out that his watch as the company’s chief tech guru has seen the company lose ground to nimbler rivals such as Google. Microsoft’s Issa points out that Gates’ tenure as chief software architect has also seen the company move into technologies such as the X-box, Microsoft TV and Windows Mobility. “There are a lot of areas that we got into that we had never done before,” he said. “These were all part of his team.” Closer to home, Gates’ focus on development has seen greater emphasis on regional development teams for the company — Microsoft’s Gulf operation now has a team of seven developers working closely with local firms and universities to develop software for the local market. While it may be too soon to pass judgment on Gates’ final legacy, it is certain that the team that has to replace him will have its work cut out for it. “You can’t replace everything that Bill brings to this company with a single person but Bill and I are confident we’ve assembled a great team that can step up and drive Microsoft innovation forward,” Ballmer said in an e-mail to Microsoft employees this month. For Microsoft to continue its success, he needs to be proved right — and fast.

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