By Rob Helm [bio]
Posted: May 3, 2004

• Illustration: Enterprise Sales Reorganization
• Illustration: MSN Reorganization

The following is the full text of an article published by Directions on Microsoft, an independent research firm focused exclusively on Microsoft strategy & technology. Each month we make one or more key articles available to non-subscribers.

Mid-year reviews have driven a host of changes to Microsoft’s organization. David Cole, a key figure behind the scenes, has taken more direct control of MSN as it closes out its second profitable quarter. The SQL Server product group is under new management as a major release approaches, and a leader from the company's finance organization will tackle Microsoft’s licensing system.

Discussed here are changes to the organization at the vice-presidential level and above since the Feb. 2004 online issue of the Directions on Microsoft OrgChart. All changes are reflected in the May 2004 issue of OrgChart (to view a sample of an older Orgchart, see OrgChart Sample).

Cole Expands Control of MSN

The most notable changes in Microsoft's seven business units concern MSN. There, MSN and Personal Services Division Vice President David Cole will take a more direct role in sales and finance. Meanwhile, leadership for the MSN.com portal has been distributed among a larger team, and the unit's online services, such as Hotmail, have been consolidated with its subscription businesses, such as MSN Internet Access.

Sales and Finance to Cole

Vice President Judy Gibbons will head a new MSN Global Sales and Marketing Division and report directly to Cole. She will be responsible for all MSN sales and marketing; she formerly led MSN International and reported to Vice President Yusuf Mehdi. Reporting to Gibbons will be Joanne Bradford, vice president and chief media revenue officer, and Richard Bray, formerly vice president of MSN North America and now head of global marketing for MSN.

In addition, Bruce Jaffe, vice president and chief financial officer of MSN, will report directly to Cole, rather than to Mehdi. Jaffe remains responsible for MSN's finances, strategic planning, and business development.

MSN has been part of Cole's responsibilities since a major reorganization in 2001, but he has generally stayed out of the limelight—Mehdi has acted as the unit's public face and taken responsibility for profit and loss. The organizational changes could signal a shift in formal profit-and-loss responsibility for the division, but the company has not announced such a change.

Mehdi Retains Portal

Yusuf Mehdi retains responsibility for the portal business as vice president, MSN Information Services and Membership Platforms. He continues to lead search, commerce, digital media, and information services, such as MSN Money, MSN Autos, and Slate.

However, these functions are now divided among more managers than previously. Chris Payne, formerly vice president for all MSN.com Web sites, is now vice president of Search and Commerce and will focus exclusively on those functions. He will have plenty to do as the company tries to catch Google in the search arena and promote paid search to advertisers. However, the search expert that MSN hired away from paid-search firm Overture in Nov. 2003, General Manager Paul Ryan, has already left the company.

Two managers are taking on the remaining MSN.com functions. General Manager Hadi Partovi will lead digital media and entertainment (including the nascent MSN music subscription service), while General Manager John Scarrow will direct the MSN.com publishing platform and properties such as Money. Both men now report directly to Mehdi rather than to Payne.

Irving Picks Up Subscription Services

Most of the remaining parts of MSN are now the responsibility of Blake Irving, who has been named vice president, MSN Communications Services and Membership Platform. He has responsibility for all MSN subscription businesses, including Internet access and MSN TV, in addition to his previous responsibilities leading online services such as Hotmail and MSN Messenger. Irving will be seeking to boost subscription revenues that have continued to shrink through loss of dial-up Internet subscribers, while other subscription services, such as Hotmail Extra Storage and MSN Premium "bring-your-own-access" service, have failed to take up the slack.

Irving gains most of the responsibilities formerly held by Vice President Ted Kummert, who left his position at MSN to become vice president of E-Business Servers, where he is responsible for products such as BizTalk Server and reports to Senior Vice President Paul Flessner. Most of the managers who formerly reported to Kummert now report to Irving.

Vice presidents newly reporting to Irving include the following:

Brian Arbogast, vice president, MSN Communications Platforms, now responsible for Hotmail, Messenger, MSN Mobile, and the company's antispam efforts. The move is a big change for Arbogast, who formerly reported directly to Cole and was in charge of consumer-facing Web services, such as Passport, as well as the .NET My Services project, which Microsoft shelved in 2001.

Steve Liffick, who has been promoted to vice president, MSN Communications User Experience, and adds MSN localization, Web user experience, and content filtering to his former responsibilities. Liffick formerly held the title of general manager, MSN People and Groups, Messenger, and Alerts.

Changes for Server and Tools

In the Server and Tools division, headed by Senior Vice President Eric Rudder, a critical post has been vacated, and systems management and marketing are each consolidating their leadership.

SQL Server Leader Goes to Security

Gordon Mangione has left his position as vice president, SQL Server. The departure comes at a difficult time for the SQL unit: the company recently announced a delay in the release of SQL Server 2005 (formerly code-named Yukon) until the first half of 2005.

Mangione will become vice president, Security Products, where he will head the development of Internet Security and Acceleration (ISA) Server and antivirus products and report to Vice President Mike Nash. Mangione's SQL duties will be taken over by his former boss, Senior Vice President Paul Flessner, who remains in charge of Exchange and E-Business Servers.

Also moving to the Security business unit is Richard Kaplan, who formerly reported to Eric Rudder as vice president, Content Development and Delivery Group. Kaplan will head security marketing and report to Nash. No replacement has yet been named to lead Kaplan's former group, which is responsible for the Microsoft.com Web site, training and certification programs, and Patterns and Practices Guides.

Systems Management Under One Leader

Vice President Kirill Tatarinov has gained responsibility for all systems management products and technologies. Formerly, Tatarinov had responsibility for the stand-alone management products only—Systems Management Server (SMS), Microsoft Operations Manager (MOM), and Application Center Server—which made it more difficult to resolve issues such as how to integrate management elements in Windows with those provided by server products.

Tatarinov will have responsibility for systems management features of the Windows OS, including Windows Update, Group Policy, Automated Deployment Services, and command-line and graphical administration tools. Tatarinov will continue to report to Bob Muglia, senior vice president, Windows Server Group.

Server Marketing Centralized

Marketing for the Server and Tools division has been centralized under Andrew Lees, vice president of sales and marketing for the division, who reports to Rudder. All managers in charge of marketing specific servers, who were previously part of the product groups for those servers, will now report to Lees.

This consolidation mirrors that in the Information Worker division, where all marketing is supervised by Chris Capossela, vice president, Information Worker Product Management Group. Such consolidation could help the company's present efforts to market its server products as an integrated "Windows Server System," but could widen the gap between the technical staff of each product group and their corresponding marketing personnel.

New CIO, Licensing Leader

Operations groups headed by Chief Financial Officer John Connors and the architecture groups that report to Bill Gates have seen notable changes.

Ron Markezich promoted to Chief Information Officer (CIO). Vice President Rick Devenuti has delegated his CIO duties to Markezich, who most recently was general manager, Global Technology Services, where he was responsible for the Microsoft corporate network, data centers, and IT services. Devenuti remains vice president, Worldwide Services, and will continue to lead Microsoft's consulting arm and will oversee Markezich.

Brent Callinicos moves to Licensing. The company's longtime treasurer, Brent Callinicos, has left that slot to become vice president, Worldwide Licensing and Pricing, responsible for licensing programs and usage rights. Replacing Callinicos as Treasurer is George Zinn, who formerly reported to Marshall Phelps in Microsoft's intellectual property and licensing team (part of the legal department). Zinn will oversee the company's investments and risk management, including its internal financial controls, as did Callinicos.

Callinicos arrives in the licensing hot seat just as the company approaches the end of its fiscal year, when many long-term licensing agreements expire and a significant percentage will not be renewed, according to Connors. Sending a longtime Connors lieutenant and financial expert to the licensing position could be a first step toward filling the gap left by those agreements.

Callinicos replaces Vice President Bill Landefeld, and will report to Group Vice President Jeff Raikes as did Landefeld. Landefeld's new position has not been announced.

Jon DeVaan to lead engineering practice team. Jon DeVaan has been named Senior Vice President, Engineering Strategy, reporting directly to Chief Software Architect Bill Gates. DeVaan will drive improvements in Microsoft's engineering practices. This is a critical new role: as the development teams and products continue to grow, and as Gates's architecture group continues to design "waves" of multiple integrated product releases, the company must significantly scale up its development processes to ensure predictable quality and schedules. DeVaan headed the company's interactive TV efforts until 2002, when he stepped into an advisory role.

Global Focus for Public Sector Sales

In the sales organization, the most notable change is the creation of the Worldwide Public Sector sales organization under Senior Vice President Maggie Wilderotter. Wilderotter, who was formerly responsible for the company's competitive strategy for "non-commercial software," such as Linux, will now have a chance to battle that threat globally as she directs all customer and partner outreach in the government and education markets.

Vice President Linda Zecher, who leads public sector sales, marketing, and service in the United States, will now report to Wilderotter rather than Gerri Elliott. Also reporting to Wilderotter is Pete Hayes, vice president in charge of the public sector for Europe, the Middle East, and Africa (EMEA).

Inside the United States, the most notable change is the departure of Vice President Erik Renaud from his job leading district-based enterprise sales. Renaud will now direct worldwide enterprise sales strategy and execution as vice president of enterprise sales, reporting to Simon Witts, vice president of the Enterprise and Partner Group (EPG), which reports to Rudder.

Renaud works alongside an EPG veteran in his new role: Charles Stevens, who has become vice president of Enterprise Specialist Sales. Stevens is a former head of the EPG who left to take over marketing for the Enterprise Storage Division when the EPG was briefly disbanded in late 2002. Stevens will now report to Simon Witts and will oversee sales of server and incubation products and manage solution sales and technical sales organizations.

The three regional vice presidents for enterprise sales in the United States who reported to Renaud will now report directly to Elliott: Paul Houghton (East), Geoff Nyheim (Central), and Ralph Young (West). However, Frank Clegg, president of Microsoft Canada, now reports to Bill Veghte, vice president in charge of North American sales and marketing, rather than Elliott.

Separately, Philip Swan, vice president of Device Solution Sales in Rodrigo Costa's OEM Division, has left the company.

Emerging Businesses Ready for Next Year

Microsoft's other emerging businesses—Home and Entertainment, Mobile and Embedded, and Business Solutions—have seen less change than MSN. In Home and Entertainment a former Sega executive has taken command of the game software business, while new managers move into software development in Mobile and Embedded.

Moore Gains Games Publishing, Worldwide Marketing

In the Home and Entertainment division led by Senior Vice President Robbie Bach, Peter Moore has been named vice president of Worldwide Content and Marketing. Notably, Moore gains responsibility for games publishing (headed by General Manager Shane Kim, who replaced Vice President Ed Fries when he left the company) as well as worldwide marketing. Moore was formerly vice president of retail sales and marketing for EMEA and Japan, and before that was president of Sega America. Moore will finally get the chance to compete with Sony on a level playing field when Microsoft releases a new, lower-cost Xbox console before or simultaneously with a new Sony game console.

Reporting to Moore will be Mitch Koch, vice president, retail sales and marketing, who formerly reported directly to Bach. Eduardo Rosini, vice president of Home and Entertainment, EMEA, will now report to Koch rather than Moore.

Elsewhere in Home and Entertainment, Deborah Black, formerly vice president of the Kids and Education software business, has left the company. Black had previously led all the company's systems management efforts in a role analogous to Kirill Tatarinov's.

New Technical Leaders for Mobile

Senior Vice President Pieter Knook, who heads the Mobile and Embedded Division, will supervise two new technical leaders.

The Windows Mobile platform (used in Pocket PC and Smartphone devices) will be the focus of Ya-Qin Zhang, vice president, Mobile and Embedded Development. Zhang will also supervise development of the Windows CE OS and tools. Zhang comes to the division from Microsoft Research, where he oversaw research facilities in the Asia-Pacific region. The unit was formerly led by General Manager Kevin Shields, who continues to report to Knook in an unspecified role.

Under Shields and his predecessor, Ben Waldman, the Pocket PC platform went through multiple refinements that allowed it to gain significant ground on Palm, the industry leader. Zhang's top challenge will be to make similar gains on smart phone leader Symbian while maintaining momentum for Pocket PC.

A new Devices, Services, and Experiences (DSX) group led by Vice President Todd Warren will focus on automotive devices, mobile mapping applications (such as the MapPoint Web service), and other emerging devices and applications. Warren was formerly general manager of the Embedded Devices Group and responsible for development of tools for Windows XP Embedded and Windows CE in custom embedded devices, a role that has been taken over by Zhang.

Additional changes have been made in mobile and service provider sales and marketing. Suzan DelBene has been hired as vice president of Mobile and Embedded Device Marketing, reporting to Knook and responsible for all strategic partnerships, business development, and marketing in Knook's organization. DelBene is returning to Microsoft after a six-year stint at other companies, including Nimble Technology and Drugstore.com. Her new role is analogous to that of Juha Christensen, a cofounder of Symbian who joined Microsoft and then left for Macromedia in 2004.

Kimberly Till has been hired as vice president, Media and Entertainment, where she will lead sales and strategy for the media and entertainment industry. Till will report to Maria Martinez, vice president, Communications Sector, who in turn reports to Knook. Till was formerly a senior vice president at Time Warner and led financial operations and strategy at Warner Music Group.

Also in Martinez's organization, Martin Thall has left his position as vice president, Communications Sector, Americas, to become general manager of the Automotive Business Unit, reporting to Todd Warren. Vice President Dick Brass, who formerly led the Automotive unit, has retired. A vocal advocate of Microsoft's automotive vision, Brass also had led the company's entry into software for electronic books.

In North America, Thall's former responsibilities will be taken over by General Manager Harry Patz, who previously ran Communications Sector sales for the eastern United States and Canada. Communications Sector sales in Latin America and EMEA fall to General Manager Rene-Philippe Mantrand, who was formerly general manager of business strategy in Orlando Ayala's Small and Midmarket Solutions and Partners (SMS&P) Group. Both will report to Martinez.

Small Changes in Windows, Information Worker

The divisions running Microsoft's most important businesses—Windows and Office—have seen little change. However, the Dec. 2003 reorganization, begun with the formation of the Windows Core Operating System Division under Senior Vice President Brian Valentine, continues to play out.

Most recently, Valentine has gained responsibility for development, testing, and release of Windows XP, 2000, and NT 4.0 service packs and hotfixes, as well as localization.

In addition, Robert Short, vice president of Windows Core Technology, now reports to Amitabh Srivastava rather than directly to Valentine as before. Srivastava is vice president of Core Operating System Development and reports to Valentine. Jawad Khaki, who also reports to Valentine, has been named vice president, Windows Networking and Device Technologies. In this role Khaki will supervise Windows networking technologies as before, but will also be responsible for core Windows drivers, the driver architecture, and device services such as power management.

Also in Windows, Joe Peterson, vice president, Windows User Experience, has taken on some roles vacated by Chris Jones when Jones moved to head up core OS program management under Valentine. Specifically, Peterson will now supervise Windows graphics and gaming technologies, as well as client user interface design and development. Peterson reports to Will Poole, senior vice president of the Windows Client business.

Finally, in the Information Worker division, the most notable change is the departure of Vice President Ralf Harteneck. Harteneck, who has left the company, led the development of Outlook 2003, one of the most widely praised components of the Office 2003 client applications.

Resources

Planned MSN search changes and the departure of Paul Ryan are discussed in "MSN Search Changes Outlined" on page 29 of the May 2004 Update.

Systems management strategy and leadership are outlined in "More Integration on Management Roadmap" on page 12 of the May 2004 Update.

The E-Business Servers product roadmap and organization changes are outlined in "E-Business Roadmap Shifts" on page 10 of the Apr. 2004 Update.

Licensing deadlines and their effect on revenues are analyzed in "Software Assurance Approaching Critical Deadline" on page 26 of the Apr. 2004 Update.

Mobile device services organization and strategy are covered in "MSN Mobile Deals with Platform Providers" on page 27 of the May 2004 Update.

Non-commercial software strategy, including the roles of Maggie Wilderotter and Martin Taylor, are explained in "Connors, Strategist Take on Linux" on page 37 of the Apr. 2004 Update.

The Dec. 2003 Windows reorganization, creation of Andrew Lees' organization, and other changes are summarized in "Reorganization Tightens Windows Focus" on page 28 of the Feb. 2004 Update.