Microsoft shifting its focus towards sales over development, says analyst

Redmond (WA) - As Jim Allchin begins his new job of spending the next 14 months or so training his replacement as President of Microsoft’s new Platforms Division, a prominent analyst focused on Microsoft tells us, the company’s focus may be shifting away from what CEO Steve Ballmer famously called "Developers ! Developers ! Developers !" and toward a more button-down, sales-driven approach.

"We sometimes talk about how a lot of people at Microsoft are either ’Bill’ people or ’Steve’ people," said Matt Rosoff, lead analyst for commercial and consumer services at Directions on Microsoft. The appointment yesterday of Kevin Johnson, formerly Group Vice President for Worldwide Sales, to the post of co-president - along with Allchin - of the new Platform Products and Services Division, may be seen by many in and outside of the company as the rise of the "Steve" people.

Under Microsoft’s new corporate alignment, Johnson will have oversight of the client and server editions of Windows, all developer tools such as Visual Studio, as well as MSN. Alchin, who previously served as Group Vice President for Platforms, will serve as co-President with Johnson only until the release of Windows Vista in late 2006, the company announced yesterday..

Microsoft’s newly named co-president, Jim Allchin, during a keynote presentation at PDC 2005.
Matt Rosoff told Tom’s Hardware Guide that the replacement of a developer with a salesman might affect Microsoft’s corporate chemistry. "Allchin has been there, and has been leading technical development on Windows, for a long time," said Rosoff, "and for servers and tools and other platform products for several years now. So I think putting [in] somebody from the Sales organization, instead of a person with a technical background, might have an effect on morale."

Rosoff added that Microsoft’s veteran technical engineers will remember a time when they ran the show, and might view the shift in background as an unfortunate shift in philosophy as well. On the other hand, he added, "I personally think that it makes some sense. Microsoft is a bigger company now, and I think it makes some sense to have people with customer-facing and managerial-type skills, at these top-exec-level positions."

Jeff Raikes, previously Group Vice President for Information Worker Business and another "Steve" person, has been named President of Microsoft’s new Business Division. A 24-year veteran of Microsoft, Raikes will also continue to oversee the Information Worker Group. In a previous draft of this article, we erroneously reported that responsibility for Microsoft Office had been transferred to Johnson’s division ; we apologize for that error and stand corrected. Doug Burgum, Senior Vice President of what had delightfully been called the "Business Solutions Business Group," will now report to Raikes, although with one less "Business" to worry about.

Perhaps the second biggest surprise coming from yesterday’s announcement was the shuffling of alignments for two of the company’s principal projects. Apparently no longer considered a "platform," the Mobile Devices group is being grafted onto the company’s Entertainment and Devices Division. Robbie Bach, who had been the visible and popular senior vice president of what was called the Home and Entertainment division, will now have oversight of mobile devices - and presumably Windows Mobile as well - along with Xbox.

"There are some parts of Mobile and Embedded that I suspect will find their way back into the Platforms group," Rosoff told Tom’s Hardware Guide . Chairman Bill Gates and CEO Steve Ballmer are frequently talking about the hundreds of millions of cell phones in the market as a huge opportunity for them, Rosoff pointed out, "and if Microsoft can get a small percentage of those cell phones, then that turns into a very interesting business." The threat from Palm has been met, he said, and the threat from Blackberry may very well yet be met. So the "big numbers" are Bill and Steve’s next big target.

"Microsoft and its partners have had MP3 players that play Windows Media Audio format for longer than the iPod has been around," said Rosoff, "and yet the iPod dominates that market, and I know that that’s a sore spot. I think Robbie Bach is charged with creating all of the spokes that connect to the PC hub, for the consumer strategy."

The other shuffled project in the Microsoft repertoire is MSN, which now falls under the Platforms Group. Rosoff believes this may be an indication that, as MSN’s role as an ISP comes to a close, its focus will be shifted away from consumer services and more toward business functions, perhaps playing some role in Microsoft’s expanded focus on Web services. "What that says is, hosted services, Internet-delivered services for business, are a big future focus, and they want to have those more tightly integrated with Windows and the server businesses," said Rosoff.

Less well understood is the repositioning of Eric Rudder, previously senior vice president for servers and tools (which at one time meant "developer and administrator applications"), to a new position, thus far unnamed, that reports directly to Gates, in his role as Chief Software Architect. Rudder had at one time been a key technical advisor to Gates, before being promoted to lead the Tools group, then to overseeing a combined Server and Tools group. Perhaps he expected Johnson’s post, Rosoff suggested, and in disappointment, chose to move himself away from a public-facing management role. In the meantime, Rosoff said, "someone’s going to have to take [Rudder’s] place at the head of the server and tools business unit, and we don’t know who that’s going to be yet. So there’s plenty of room for other changes."