• Illustration: Personal Services Reorganization, Winter 2001

Microsoft has consolidated its Internet portal and subscription service efforts by moving the MSN business unit into the Personal Services Group (PSG). The move indicates that MSN is transitioning into a new role as a gateway to the subscription services being created by the PSG. As part of the same reorganization, the teams responsible for mobile and wireless products will move out of the PSG and begin reporting directly to CEO Steve Ballmer. Finally, former PSG leader Bob Muglia is taking on a new role overseeing the company's strategy for storage data management in the enterprise. (For a graphical overview of the changes, see "Personal Services Reorganization, Winter 2001".)

MSN Brought into PSG

The reorganization brings Yusuf Mehdi's MSN Division (responsible for MSN sales, marketing, business development, and network programming) out of President Rick Belluzzo's organization and into the PSG. Although the PSG is being renamed the "MSN and Personal Services Group," it will be led by PSG veteran David Cole, and its charter will remain the same as that of the PSG: to create and market a set of compelling, fee-based services that compete effectively against AOL. Mehdi will now report to Cole.

Cole has been leading the PSG's Personal Services Platform Division, which is responsible for consumer Web services, such as Passport, Hotmail, and the planned .NET My Services. In his new role, Cole will retain all his current direct reports and continue to oversee operations and software development for all of Microsoft's Web properties.

Cole will also take over many of Muglia's former duties, leading such diverse projects as MSN Internet Access, the development of new subscription services, and technology for natural interaction between users and computing devices (e.g., speech recognition). He will report directly to CEO Steve Ballmer.

The reorganization is a logical step in the evolution of MSN. Originally founded in 1995 as an AOL-like online service, then retooled into an advertising-supported Web portal and network sites, MSN has never been a profit center for the company. Now, Microsoft hopes to recoup its investment by funneling MSN's estimated 200 million visitors into fee-based services based on.NET My Services. Because MSN will serve as one gateway to these fee-based services (future versions of Office and Windows are likely to be others), it's logical to make MSN part of the same group that's creating the services themselves. (For background, see ".NET My Services Picture Getting Clearer" on page 26 of the Dec. 2001 Update.)

Ballmer to Oversee Mobile Devices

CEO Steve Ballmer has taken control over Microsoft's strategy for mobile devices, indicating frustration with the lack of progress in this area. The company's mobile strategy has been uncertain since Mobility Group leader Paul Gross retired in June 2001. (See "Wireless Leader Paul Gross Resigns" on page 23 of the July 2001 Update.) Previously, both Juha Christensen's marketing-focused Mobility Division and Ben Waldman's development-focused Mobile Devices Division reported to Muglia in the PSG; now they will report directly to Ballmer.

Muglia will be senior vice president of a new division charged with overseeing Microsoft's strategy for enterprise storage data management. He will report to Platforms Group Vice President Jim Allchin.