Five Businesses Head into FY'07

Higher expenses and lower profit margins will characterize Microsoft’s financial results as the company strives to extend its business beyond desktop PC and server software into online services and home entertainment. Speaking at the company’s annual Financial Analyst Meeting (FAM) in July 2006, CEO Steve Ballmer insisted that Microsoft will not back down from new business areas, but he also promised greater discipline, including faster product release cycles, in its core businesses. New leaders and a reorganization from seven business segments into five are intended to help the company achieve these challenging goals.

Client: New Leaders, Opportunities

The Windows Client business segment, which encompasses Microsoft’s desktop operating systems and earns the most profits, is in the midst of a leadership transition that will be complete by the end of FY’07 (June 30, 2007). Since last year’s FAM, longtime Windows leaders Jim Allchin, Will Poole, and Brian Valentine have announced their retirements or moved to less prominent positions, while a new team centered around President Kevin Johnson and Senior Vice Presidents Steve Sinofsky and Jon DeVaan is moving into place. (For an organizational chart showing the leaders of all five business units, see “Who Leads the Five Businesses?“.)