Kara Swisher

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No Heir — Though Lots of Spares — to the Microsoft Throne in New Reorg of Tech Giant

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There will doubtlessly be a lot of what-it-all-means chewing over the two very long memos by Microsoft CEO Steve Ballmer about his massive redo of the Microsoft executive bench today.

Among the many questions: Can the notoriously political execs at the software giant learn to play nice in the much more significantly interdependent new organization? Can there be such a thing as “One Microsoft”? What happens when there is disagreement, and management finds it hard to follow Ballmer’s rule that “we are rallying behind a single strategy as one company — not a collection of divisional strategies”?

All of this will be sorted out in the months ahead, of course, taking many months or more before it’s clear how the new org works.

But one key question that the longtime leader of the tech giant most definitely did not answer in any way whatsoever is this: Who will eventually replace him in running the company? The new reorg does not point to any one person as an heir apparent to Ballmer.

To be clear: This change envisions that Ballmer is not close to retiring from his job with this change, despite periodic pressure from a variety of shareholders to dump him, and persistent rumors that he was on the brink of stepping down. That could certainly change, but he has set up the new org to center on him almost entirely and with an intent to not move out of his current job (we’ll see about that).

There have also been few changes at the top echelons of the company.

In fact, other than the retirement of veteran Kurt DelBene, who had been president of Microsoft Office, as well as the recent departure of Xbox head Don Mattrick to Zynga, all the top managers — most of whom are now executive vice presidents, down from president of units — are exactly the same, except with new division names, with some movement of duties and responsibilities.

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As I noted earlier, the new engineering units — Operating Systems, Applications and Services, Cloud and Enterprise, and Devices and Studios — are key parts of the new set-up, and probably are where the top internal candidate for the next Microsoft CEO would come from.

Specifically, Windows Phone head Terry Myerson will head OS, which includes the flagship Windows, as well as Xbox software and systems; Windows co-head Julie Larson-Green will be in charge of all hardware development, including Surface and Xbox, as well as all games, music, video and other entertainment; Online Services head Qi Lu will run a range of productivity, communication and search apps and services; and Servers and Tools head Satya Nadella will be in charge of cloud, including data center, database and enterprise IT and development tools.

Perhaps the most interesting appointment is that of Skype president Tony Bates, who will lead the Business Development and Evangelism group, focusing on business development, corporate strategy and on key partnerships with companies like Yahoo and Nokia, as well as evangelism of Microsoft products and developer outreach.

In addition, current Business Solutions head Kirill Tatarinov will continue to run a similar unit, now apparently called Dynamics, although his product, marketing and sales functions will be centralized; CTO Eric Rudder will lead an Advanced Strategy and Research group; Windows co-head Tami Reller will head all marketing across the country and work with marketing strategy leader Mark Penn on centralized advertising and media functions; COO Kevin Turner will continue to lead worldwide sales, as well as other areas, as before; CFO Amy Hood will be in charge of newly centralized finance orgs; and both legal head Brad Smith and HR head Lisa Brummel will remain in their same jobs. Microsoft Office president Kurt DelBene will retire, while senior advisor Craig Mundie is stepping down from the senior leadership team to do an unspecified special project for Ballmer. In an important move, Microsoft Research head Rick Rashid will have a new role related to OS innovation.

Like I said, these are the exact same faces today as yesterday, making it hard to determine what any of them needs to do to surge to the top, especially with Ballmer’s new insistence that everyone swims together or, presumably, they sink together.

The entire restructuring also requires more collaboration across the new divisions. “We will see our product line holistically, not as a set of islands,” wrote Ballmer. “All parts of the company will share and contribute to the success of core offerings, like Windows, Windows Phone, Xbox, Surface, Office 365 and our EA offer, Bing, Skype, Dynamics, Azure and our servers.”

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Thus, picking a winner is impossible, which is especially true since each of the top execs has certain good points, each one also has their challenges, from lack of technical chops to management struggles to perceived lack of vision. It’s the top of a company, so the air is always thinner, but now these execs will be more scrutinized than ever by the company’s staff and board, investors, media and, of course, each other.

The lack of one clear exec at the top nearest Ballmer also suggests that perhaps it will be an outside candidate who will eventually take over at Microsoft. Numerous names have been bandied about, such as former exec Paul Maritz (who now heads cloud spinoff Pivotal), Juniper Networks CEO Kevin Johnson, and many others.

Of course, it’s all just a mental exercise at this point. With this change, Ballmer has put his definitive stamp on Microsoft, at least for the next few years. Which is: As always, I’m in charge here.

For now, at least.


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— Kara Swisher and Walt Mossberg, in their farewell D post