In-Depth

Meet the New Bosses: The Key Executives in Microsoft's Reorg

Steve Ballmer unveiled a much anticipated major reorganization intended to change the conflict orientation of Microsoft's culture to one of shared focus. Some of the winners in Ballmer's new structure are familiar faces. Others are being pulled into the spotlight from deeper within the organization.

• By Jeffrey Schwartz
• September 09, 2013

Editor's Note: This article appears as it ran in the September print edition of Redmond Channel Partner magazine. Since the issue went to the printer in mid-August, several significant events occurred. CEO Steve Ballmer announced he would retire within 12 months. His replacement will be named sometime in that period, and may end up being one of the executives profiled here. Meanwhile, Microsoft also announced the acquisition of Nokia. Part of the acquisition plan involves bringing Stephen Elop back to Microsoft as an Executive Vice President for Devices, with Julie Larson-Green reporting to him.

Microsoft CEO Steve Ballmer announced the creation of four new engineering groups this summer as part of a widely expected organizational and management shakeup in the company. While there's some shuffling at Microsoft every year, this reorganization has the feel of a signature move by Ballmer, who appears to be trying to put a significant and enduring stamp on the organization at a critical time.

One of Ballmer's aims with the reorg is to break down Microsoft's silos both from a marketing and engineering standpoint. This so-called "One Microsoft" is a marked departure from Bill Gates' legacy of setting engineering groups against each other to work on similar technologies.

Ballmer created four new engineering groups: Operating Systems, Applications and Services, Cloud and Enterprise, and Devices and Studios. The structure is supposed to deliver on Ballmer's vision of becoming a devices and services company.

In a letter to employees, Ballmer said the move is aimed at revamping how Microsoft deals with all of its stakeholders. "We will reshape how we interact with our customers, developers and key innovation partners, delivering a more coherent message and family of product offerings," Ballmer said in the letter. "The evangelism and business development team will drive partners across our integrated strategy and its execution."

Ballmer emphasized that the reorganization of Microsoft's engineering silos is just as critical as its go-to-market realignment. "We will pull together disparate engineering efforts today into a coherent set of our high-value activities," he said. "This will enable us to deliver the most capability -- and be most efficient in development and operations -- with the greatest coherence to all our key customers. We will plan across the company, so we can better deliver compelling integrated devices and services for the high-value experiences and core technologies around which we organize. This new planning approach will look at both the short-term deliverables and long-term initiatives needed to meet the shipment cadences of both Microsoft and third-party devices and our services."

Ballmer's reorganization elevates several executives. Some are faces familiar to the channel. Others move into the spotlight from deeper within the organization.

Terry Myerson

Executive Vice President, Operating Systems Engineering Group

Terry Myerson will run the new Operating Systems Engineering Group, which includes consoles, Windows and all back-end systems including server and cloud OSes. The group covers all OS development, including game consoles, mobile devices, PCs, back-end systems and the OSes that run cloud services. Myerson's immediate background at Microsoft came in the Windows Phone Division, and he also spent eight years in the Microsoft Exchange Server group. Reading the tea leaves, Ballmer's choice of Myerson sends an important signal that Microsoft will double down on the tile-based vision of Windows that originated on the Windows Phone platform and spread to Microsoft's other platforms, despite the market struggles of both Windows Phone and Windows 8.

Satya Nadella

Executive Vice President, Cloud and Enterprise Engineering Group

One face very familiar to the channel in this reorg is Satya Nadella. He gave a keynote at the Microsoft Worldwide Partner Conference (WPC) in July and has given prominent talks at the WPC before. Nadella was formerly president of the Microsoft Server and Tools Business. His new role is very similar and strategic, as the Server and Tools Business continues to perform even as other longtime mainstays of Microsoft's business struggle. As executive vice president of Cloud and Enterprise, Nadella will head cloud and enterprise engineering of all back-end technologies, including datacenter, database and development tools. Nadella will also oversee datacenter development, construction and operations -- a massive job in itself, as Ballmer recently revealed that Microsoft has about 1 million servers worldwide.

Qi Lu

Executive Vice President, Applications and Services Engingeering Group

For Qi Lu, Ballmer's reorganization is an expansion of duties. The former Yahoo! Inc. executive most recently was president of the Microsoft Online Services Division, which covered search, portal and online advertising. Now Dr. Lu, who worked as a researcher at IBM Corp. and at Carnegie Mellon before his 10-year stint at Yahoo!, will be responsible for strategy and R&D for Microsoft Office, Office 365, SharePoint, Exchange, Yammer, Lync, Skype, Bing, Bing Apps, MSN, and the Advertising platforms and business group. The portfolio includes one of Microsoft's crown jewels -- Office, formerly run by Kurt DelBene, who departed in the reorg.

Julie Larson-Green

Executive Vice President, Devices and Studios Engineering Group

Julie Larson-Green is a Microsoft veteran but a new face in Ballmer's inner circle. Larson-Green's star rose with Windows 8, when she gave some of the first major preview demos of the OS as one of Windows President Steven Sinofsky's lieutenants. When Sinofsky left Microsoft under somewhat mysterious circumstances, Ballmer chose not to hand the power of Sinofsky's office to one person, instead splitting the duties between Larson-Green (engineering) and Tami Reller (CFO and marketing). Possibly Ballmer was already thinking about a significant reorg at that time. While Larson-Green didn't end up getting the Operating Systems Engineering team (Myerson's role is probably closest to what Sinofsky had been doing), she did get a very interesting engineering plum in the Devices and Studios Engineering Group, given the prominent place awarded to devices in the new Microsoft "Devices and Services" strategy. The slot opened up for her following the abrupt exit of Donn Mattrick, who left shortly before the reorg to become CEO of Zynga, the struggling game developer. Larson-Green's new job puts her in charge of Surface, Xbox, and other hardware development, as well as supply chain management of those devices, and studios for games, music, video, and other entertainment.

Tony Bates

Executive Vice President, Business Development and Evangelism Group

Tony Bates, who came over from the Microsoft acquisition of Skype, will oversee important partnerships with OEMs and key partners such as Yahoo! and Nokia.

Tami Reller

Executive Vice President, Marketing Group

Tami Reller will head all marketing, a step up from her previous role handling marketing (and serving as CFO) for only the Windows Division.

Eric Rudder

Executive Vice President, Advanced Strategy and Research Group

Eric Rudder, onetime technical assistant to Bill Gates and a regular candidate in the "who will lead Microsoft after Ballmer" parlor game, heads the Research and Trustworthy Computing teams.

Related:

• Ballmer Announces Major Microsoft Reorg and Executive Shuffle
• Who's Next as Microsoft CEO: Possible Replacements for Steve Ballmer