Bloggers debate what reorg means for Microsoft

Newly formed divisions in particular have led to speculation about the software giant's future.

Microsoft's announcement of a dramatic reorganization sparked a flurry of chatter in the blogosphere.

The company's shift to a structure consisting of three major divisions came alongside news that Jim Allchin, the head of Windows development, will retire when Vista is released. The announcement of Allchin's upcoming exit alone was enough to get Microsoft watchers talking, since he has largely guided the direction Windows has taken over the years.

But one of the newly formed divisions is leading to speculation about Microsoft's plans. That Microsoft has folded its MSN group into its platform product development group is a signal that the company is reacting to Google's dominance on the Web and will use the new group to compete in the realm of on-demand software.

Whether the reorganization will be enough for Microsoft to carve out its place in the Web 2.0 world is up for debate. Many in the blogging community see the move as the death throes of an aging company. But despite all the talk about how this restructuring will affect the software giant's future, the news didn't come as a shock to some, who noted that any large company is due for a shakeup now and then, and that Microsoft was simply cleaning house like any smart company would.

Bloggers' reactions
• Folding MSN into the platforms group is explicitly placing it where it can be most turned into a Web services 2.0 company. We've seen inklings of this already, as MSN has started to expose APIs. If I am right, expect this to turn into a firehose of APIs, as they start to try to compete with Google.
Alec Saunders .log

• Microsoft, for all its faults, does one thing better than most other companies--looks itself in the mirror, doesn't like what it sees and quickly tries to do a makeover. Today's makeover is keeping in with that tradition. The tradition that made Netscape public enemy No. 1 and Internet the opportunity No. 1.
Om Malik's Broadband Blog

• And contrary to others on the board--I actually believe that our challenge in leadership is not having too few people who understand technology--in fact, I believe we have too many people who have never had to run a business or figure out a P&L or find a new profitable business venture--JimAl? He probably can't even tell if a P&L is upside down! BrianV? I think the world of him in terms of being an engineer, but understanding how to run a business and make money doing it? He's out of his league. KJ, Raikes, Robbie Bach, Orlando, BillG & SteveB are really our only broadly effective business leaders--I believe we need more of these kinds of guys, not less. You'll recall that as much as BillG is technically smart, he is even more "business smart." He invented an entirely new business model (independently purchased software) and built a huge partner ecosystem to make that model succeed. Steve knows this, and that's why we have a new COO from Wal-Mart and why tomorrow's reorg is going to put business leaders running our businesses rather then techies. We need more business-savvy people like Bill and Steve, not less.

• Well, Microsoft is in trouble and has bet the farm on a reorg within the company. Unfortunately, I don't see how this is going to change the course of the company.
Another Rovian Conspiracy

• While the timing of the latest reorganization is being pegged to Allchin's retirement, such a reconfiguration of Microsoft's product, development and power structure might have been inevitable as the company gears up to take on threats such as Linux and open-source software, and search engine giants Google and Yahoo.

• While the announcement is suitably upbeat, as you'd expect, I think it does show that senior management know something is wrong but aren't quite sure what it is or what to do about it...While Microsoft may be able to make faster decisions now, this doesn't really help if their framework and strategy is fundamentally flawed. They're not only paddling their canoe in the wrong direction--they're paddling up the wrong river.
Russell Buckley & Carlo Longino on Mobile Technology

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