Executive Departure Reshuffles Microsoft Deck

The departure of Kevin Johnson may give Microsoft CEO Steve Ballmer the opportunity to reshape the huge platform and services division into more effective business units.

The end result may be better financial results for Microsoft and better products for Microsoft customers.

Those changes highlight the extent to which the company is beginning to understand the importance of Web-based business activity, including SAAS (software as a service) as well as Web-based collaboration.

In a memo to employees obtained by Cnet, Ballmer outlined the reorganization the company will undertake in the aftermath of Kevin Johnson's departure:

Effective immediately, Steven Sinofsky, Jon DeVaan, and Bill Veghte will report directly to me to lead Windows/Windows Live. In the Online Services Business, we will create a new senior leadership position and conduct a search that will span internal and external candidates. In the meantime, Satya Nadella will continue to lead Microsoft's search, ad platform, and MSN engineering efforts, and Brian McAndrews will continue to lead the Advertiser and Publisher Solutions Group. Both Windows/Windows Live and the Online Services Business are led by a strong group of executives on the technical and business side who have the talent and experience to address the challenges we face and drive the next generation of growth and success. 

These changes can only benefit customers, because it means that the people who initially made Microsoft the useful and innovative company it once was will be back in the driver's seat.

Microsoft Watch's Joe Wilcox explains why Johnson's departure is best for Microsoft :

Organizationally, the divisional breakup is refreshing change. Steve Ballmer created the three major divisions and president positions in a November 2005 reorganization. Sales and marketing guys assumed the major positions over a company with a loooooong history of technical history. Can you say, corporate cultural conflict?

Suddenly, the geeks are back, and they're ready to kick some sales and marketing ass. Stephen Elop, who replaced Jeff Raikes, has got technical experience. Microsoft needs Stephen to bring in some of the technical smarts he applied at Macromedia. The leaders now responsible for Windows/Windows Live and Online Services all have deep technical backgrounds.

Michael Arrington at TechCrunch agrees that the change will be a breath of fresh air, especially for anyone who care about online applications (and, dare we say, software as a service).

It’s damn well time Microsoft put someone in charge of its online efforts. Johnson had to split his time with the Windows cash machine and the results have been somewhat predictable. A half time executive running a product that doesn’t even have a brand (Live? MSN? Microsoft?) can’t win against Google.

On the other hand, Silicon Alley Insider founder Henry Blodget notes that more organizational changes could mean more paralysis and infighting at Microsoft, something the company definitely doesn't need as it gears up for a fight with Google, Apple and Linux on a variety of fronts.

Johnson's departure--and the search for a new online business head--also means that Microsoft will now lose more time as it launches a search for a new head of the online business. The new boss will also likely want to weigh in on the division's strategy, and it's likely that his or her vision could conflict with Steve Ballmer's. This could subsequently lead to bureaucratic or political paralysis and/or yet another reorganization.

But things really can't get much worse for Microsoft--Vista has been poorly received, it has gotten zero traction in search and online services, and SAP, arguably its biggest partner in the enterprise apps space, is distracted by a drawn-out legal war with Oracle.

Which is why an opportunity for a fresh start could be just what Microsoft needs to refocus on what customers need most.