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Microsoft to reorganize
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February 8, 1999: 2:26 p.m. ET
Company plans four segments to focus on customers and Internet
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NEW YORK (CNNfn) - Microsoft Corp. is in the process of a corporate reorganization designed to focus more on its customers rather than specific product groups.
The overhaul comes as the Redmond, Wash.-based software giant faces intense competition in the Internet market and as it struggles with a federal antitrust trial, in which it has suffered a series of legal setbacks.
A Microsoft (MSFT) spokeswoman said the reorganization effort is unrelated to the trial, and that the company typically tweaks its corporate structure about once a year.
News of an upcoming reorganization was first reported by the Seattle Times, which said a formal announcement could come as soon as this week.
The spokeswoman said consideration of the changes began last July when Steve Ballmer was named Microsoft president.
Ballmer is spearheading the reorganization effort, which is being compared to the historic shifts when Microsoft split from its landmark alliance with IBM (IBM) in 1990 and when it transformed itself to focus on the Internet in 1995.
Four customer-focused segments
The current effort is expected to lead to the establishment of four broad, customer-oriented segments, according to the newspaper report:
- Consumer. This group would take in Windows and Internet customers.
- Enterprise. This segment would include the large corporate customers that use Windows NT and other industrial-strength products.
- Developers. This group would attempt to reinvigorate Microsoft's relationship with the developer community, whose members have been wooed by Internet rivals such as Sun Microsystems' Java and Jini products, among others.
- Knowledge workers. This group would target small-business and home-office customers, mobile professionals and conventional office workers who rely on the Microsoft Office suite of word-processing, spreadsheet and other programs.
The company today is organized along product lines, such as operating systems and applications programs.
The reorganization plan comes at a time when the company is in the midst of a fierce federal antitrust battle. But analysts said Microsoft is known for consistently retooling its management focus.
"I think they're clarifying their focus in certain areas," said Jeffrey Maxick, an analyst at Madison Securities. "I don't think it's a big deal, but if it helps them focus better on certain areas it's certainly a good thing."
Renewed focus on Windows
The reorganization is expected to include the return to company operations of executive Brad Silverberg, who led the development of the Windows 95 operating system. Silverberg has been on a leave of absence since 1997. Microsoft "has been seeking the right opportunity" for Silverberg, a Microsoft spokeswoman said.
The next generation of Windows will pose one of the biggest challenges for the reorganization. Microsoft had planned to replace the Windows 98 operating system with Windows 2000, which is based on the Windows NT product designed for corporate networks.
But Microsoft insiders, acknowledging concerns that Windows 2000 would add further complexity to consumer PCs while delaying the introduction of a product designed for the lucrative corporate market, have decided to retain the two products as separate programs, according to the Times.
On the other hand, a chief beneficiary of the overhaul could be Windows CE, the operating system that was introduced in 1996 to power personal digital assistants and other hand-held devices.
Microsoft officials privately project Windows CE will outsell all other flavors of Windows in the next two or three years, the report said. But that operating system will likely face stiff competition from Sun Microsystems Inc. 's (SUNW) Jini, which is designed to connect a wide variety of devices regardless of operating system.
Microsoft shares gained 3-11/16 163-11/16 in midday trade.
-- from staff and wire reports
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