Top Microsoft exec to depart amid reorganization

Rick Belluzzo, Microsoft Corp.'s president and chief operating officer and a force behind the growth of its .Net, Xbox and MSN efforts, will be leaving the company, Microsoft said yesterday.

Belluzzo, 48, will step down as president and chief operating officer on May 1 and leave the company in September. No specific reason was offered for his departure. The move came as part of a broader reorganization intended to give greater autonomy to the executives in charge of Microsoft's various product groups, the company said in a statement.

As part of the changes, Microsoft will be divided into seven business units: Windows Client, Knowledge Worker, Server and Tools, Business Solutions, CE/Mobility, MSN, and Home and Entertainment. The leaders of each unit will have "comprehensive operational and financial responsibility and greater accountability," Microsoft said.

Belluzzo, a former CEO at Silicon Graphics Inc., joined Microsoft in September 1999 as vice president of its consumer group. He was promoted to president and chief operating officer in February 2001, succeeding Bob Herbold, who retired (see story). Among his duties, Belluzzo was responsible for Microsoft's worldwide sales and marketing, human resources, and finance and licensing operations. He also managed Microsoft's efforts in the area of computer games and TV platform software.

No replacement was named.

Rick Belluzzo, president and chief operating officer of Microsoft
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Rick Belluzzo, president and chief operating officer of Microsoft

Credit: Microsoft Corp.
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Belluzzo appears to have been the victim of an internal turf war, said Rob Enderle, a research fellow at Giga Information Group Inc. in Cambridge, Mass., and a longtime Microsoft watcher. With the economy on the slide, Belluzzo had been charged with making cutbacks at Microsoft's various business units, Enderle said. Senior managers of those units probably rebelled against the idea of a relative newcomer deciding where cuts should be made, and Belluzzo apparently lost out in the conflict.

His position, which had been closer to that of president than chief operating officer, became more like that of a "glorified administrator . . . and that wasn't acceptable to him," Enderle said. At one time, Belluzzo had been tipped as a potential future successor to Ballmer, he noted.

Customers who depend on Microsoft products should have no reason to lose sleep over the departure, Enderle added. Belluzzo was more involved with running Microsoft's business than with the development of any of its products, he said.

Another analyst agreed that Belluzzo's departure will be no great loss.

"I don't think it's a particularly significant blow to Microsoft," said David Smith, a senior analyst at Stamford, Conn.-based Gartner Inc. "It's hard to put your finger on anything he's done that was particularly spectacular."

Belluzzo may have helped revive Microsoft's MSN online service, but the unit is "still not what you'd call tremendously successful," Smith said. The executive also doesn't appear to be closely involved with the development of .Net, a key project for the company that involves retooling its products to allow for the delivery of software and services over the Internet.

"There's a definite culture clash between Rick and the company," Smith said. "He's very soft-spoken. I don't think that gets you very far at Microsoft."

Belluzzo worked with Microsoft's top brass to reorganize the company in a way intended to improve its internal structure and position it for faster growth. Out of that came the decision to make Microsoft's various business unit leaders more in control of and accountable for the groups they lead, Microsoft CEO Steve Ballmer said in the statement.

"Given where Steve and I knew we needed to take the business, I decided it was the right time to pursue my goal of leading my own company," Belluzzo said in the statement.

Bill Gates, Microsoft's chairman and chief software architect, said in a statement that Belluzzo made "important contributions" to the company. In particular, his work on improving internal business processes and his role in the development of .Net, Xbox and MSN were "very significant contributions," Gates said.

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