Servers

Microsoft Reorgs Business Division

A reorganization at Microsoft Corp., announced Friday, improves the focus of two of the main divisions at the company and could line up a successor to Steve Ballmer, the software giant's CEO.

Microsoft said it would move its server and tools group, led by Bob Muglia, into its business division. The change positions Jeff Raikes, president of the business division, in control of over half the company's revenue and the bulk of its earnings growth, said Robert Helm, an analyst at Directions on Microsoft. "It puts him in a strong position to succeed CEO Steve Ballmer, should Ballmer decide to start a retreat from day-to-day management," he said.

While Microsoft's external public relations company said that the timing of the announcement is coincidental, Helm suspects that the US$6 billion acquisition of aQuantive Inc., also announced Friday, had some bearing on the reorganization plan. Microsoft moved the server and tools group out of the platform and services business, which will now include the 2,600 employees from aQuantive. Kevin Johnson, president of the platform and services division will "have his hands full" with the new aQuantive group in addition to his responsibilities over Windows Vista, Helm said. "This move is going to allow him to focus more on those tasks," he said.

Microsoft also said that the developer and platform evangelism team, responsible for working with developers, IT professionals and partners, will move under Muglia's server and tools group. Sanjay Parthasarathy, who heads the group, will report to Muglia.

Microsoft's three main divisions are now more tightly focused. Muglia's group, including products such as SQL Server, Windows Server, Visual Studio and Forefront, fits better under the business division, which targets business customers. The platform and services division is geared toward the Windows operating system as well as online services.

Microsoft also has a third business division, entertainment and devices, which produces the Zune, Xbox and Windows Mobile.

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