Allchin's Retirement Sparks Reorganization

Jim Allchin, who has overseen Windows, servers, and development tools at Microsoft since 2000, will retire after Windows Vista ships in late 2006. The announcement coincides with a major reorganization in which newly minted President Kevin Johnson, former group vice president of Sales and Marketing, will take over most of Allchin’s duties, as well as MSN. The timing of the reorganization is unusual in that such shifts generally happen in late winter or spring as the company realigns its strategy for the coming fiscal year. (Microsoft’s fiscal years start on July 1.)

CEO Steve Ballmer said the change will help the company become more agile by taking some day-to-day product decisions out of his hands, helping Microsoft compete against newer and smaller companies, such as Google. At first glance, however, the reorganization does not significantly reduce the layers of management below Ballmer, and the company will continue to report financial results for seven business units—not three, as some media outlets have suggested. Rather, the most notable feature is the movement of MSN into the same large group as Windows and servers, which suggests tighter integration between MSN’s hosted services and the company’s core software businesses. (For an overview of the changes, see the illustration “Fall 2005 Reorganization“.)