With reorg, Microsoft seeks new blood for ailing online and mobile divisions

Analyst: Exec changes are part of a 'complete reboot' of strategy vs. Google, iPhone

As part of its annual middle-of-the-fiscal-year reorganization, Microsoft Corp. on Thursday rewarded 14 senior executives with promotions, while confirming the departures of, among others, the heads of its online services, mobility and Windows consumer product marketing units.

Those are the areas in which Microsoft has fared most poorly, and where it hopes some new blood can help it do better.

Microsoft said Steve Berkowitz, senior vice president of its online services group, will step down and leave the company at the end of August, after a transition period. Berkowitz, a former CEO of search engine vendor Ask.com who joined Microsoft in 2005, will be replaced by Bill Veghte, who was promoted from corporate to senior vice president of Microsoft's online services and Windows business group.

Veghte will take on responsibility for all "end-user business strategy, sales and marketing across Windows Client, Windows Live, MSN and search," Microsoft said, adding that he will continue to have shared responsibility for the company's OEM sales.

Meanwhile, Satya Nadella was promoted from corporate to senior vice president of the software vendor's search, portals and advertising group. He is getting added responsibility for MSN programming and engineering.

Veghte, Nadella and Brian McAndrews, who is senior vice president of Microsoft's advertiser and publisher solutions group, are all getting expanded roles in overseeing business strategy, sales, marketing and engineering efforts for Windows Live, search and MSN, according to Microsoft. They all continue to report to Kevin Johnson, president of Microsoft's platforms and services division.

Rob Helm, an analyst at Directions on Microsoft in Kirkland, Wash., said via e-mail that Microsoft is reloading as part of an effort to become a more viable online rival to Google Inc. "The executive changes in the online businesses are part of a complete reboot to take on Google more effectively," Helm wrote. "They reflect the same fundamental reason that Microsoft offered to acquire Yahoo: Its current strategy hasn't worked."

Similarly, Andy Lees is becoming senior vice president of Microsoft's mobile communications business, which includes the Windows Mobile business. Lees takes over that job from Pieter Knook, who has left Microsoft to join Vodafone Group PLC.

Less than six months after its debut, Apple Inc.'s iPhone had 50% more users than all of the phones running Windows Mobile, according to data released by market research firm Net Applications Inc. in December.

Lees previously was corporate vice president of Microsoft's server and tools marketing and solutions group, which is responsible for software such as SQL Server and Windows Server.

Joining him in the company's mobility operations is Roz Ho, who was promoted from general manager of Microsoft's premium mobile offerings to corporate vice president. As part of her job, Ho, who previously headed Microsoft's Macintosh business unit, will lead Danger Inc., Microsoft's newly bought smart phone maker.

"The iPhone has forced Microsoft to rethink the way it has gone after the mobile market under Knook," Helm wrote. "In particular, the Danger acquisition and the move of Roz Ho to the mobile unit suggest that Microsoft is ready to take a more hands-on role in device design and manufacture."

Despite Microsoft having shipped more than 100 million copies of Windows Vista to PC makers, the new operating system's reception by customers remains lukewarm.

Perhaps in acknowledgment of that, Microsoft said Windows consumer product marketing will now be headed by Brad Brooks, who was named a corporate vice president. Brooks takes over the marketing duties from Michael Sievert, who is leaving the company.

Some of the promotions announced today may purely be rewards for jobs well done. With Office 2007 riding high, a trio of corporate vice presidents were promoted to senior vice president. They include Chris Caposella, who heads the information worker product management group, which includes Office; Kurt DelBene, head of the Office business platform group; and Antoine Leblond, who is in charge of Office productivity applications.

Similarly, S. Somasegar was promoted to senior vice president of Microsoft's developer division, where he will continue to oversee all developer-related languages, tools and platforms within the company. Also, Scott Guthrie was promoted to corporate vice president of the .Net developer platform under Somasegar.

Copyright © 2008 IDG Communications, Inc.

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