Microsoft CIO Out, Reorg Toward Devices And Services In?


Microsoft is reportedly working on a significant restructuring of the company that would see the company evolve to more of a "devices and services company," things outlined by Microsoft CEO Steve Ballmer last fall.

The reorganization could lead to more prominent roles for Satya Nadella, president of Servers and Tools; Tony Bates, president of Skype communications; and Don Mattrick, president of Interactive Entertainment, according to website All Things D, which notes that details are still being worked out.

Meanwhile, any potential reorganization at Microsoft will happen without CIO Tony Scott, who is leaving the company for "personal projects," according to Microsoft. He is the third senior executive to leave recently, joining the retiring CFO Peter Klein and Steven Sinofsky, who left last November as chief of the Windows division.

Last October, Ballmer wrote to shareholders that Microsoft would focus on "devices and services" going forward.

[Related: TechEd Preview: Hot Products To See From Microsoft And More]

"The full value of our software will be seen and felt in how people use devices and services at work and in their personal lives. This is a significant shift, both in what we do and how we see ourselves -- as a devices and services company," Ballmer wrote. "It impacts how we run the company, how we develop new experiences, and how we take products to market for both consumers and businesses. The work we have accomplished in the past year and the roadmap in front of us brings this to life."

Christopher Hertz, CEO, at New Signature, a Washington, D.C.-based solution provider, doesn't think Scott's departure will adversely affect his partnership with Microsoft.

"When you're in the partner channel, there's more focus on what they're doing in sales and marketing. If you asked me a week ago who the CIO of Microsoft was, I'd probably be hard pressed to tell you," Hertz said. "Their road map is managed extremely well; if Tony is leaving, I'm sure there's another 150 talented people to fill his shoes."

Hertz also said Microsoft's focus on the services has been evident, but he's still not sure he thinks of them as a devices company.

"Looking at the consumer world, you look at them as a devices [leader]. They're dominant in the world of console gaming. But in the world of devices outside of that, I'm not sure," Hertz said. "The real thing is cloud services. They've been pushing the envelope on what to do in the cloud, whether it's [Office] 365 or Dynamics or Azure or Intune or Yammer, they've got products that are services that create annuity opportunities."

The report of a reorganization caused a slight ripple on Wall Street. Microsoft shares were up 44 cents (1.3 percent) to $35.35 in morning trading Monday.

While Microsoft's stock is up 34 percent so far in 2013, the company may be looking to a reorganization that can help it reengage with investors after several years of so-so performance on Wall Street.

In 2012, Microsoft shares finished 20th among 35 technology stocks CRN tracked with a 2.9 percent increase. Two years ago, Microsoft shares finished 19th among 35 stocks with a 7.0 percent decrease in value in 2011. In 2010, Microsoft shares fell 8.4 percent, and the company finished 30th among the 37 vendors CRN tracked that year.

PUBLISHED JUNE 3, 2013