The change which will have primary impact will be that Eric Rudder, Microsoft Corp.s senior vice president of Server and Tools, will be taking on a new role. Rudder will be working directly for Bill Gates, the software giants chairman and chief software architect.
Company officials said Rudder will focus on some of Microsofts leading advanced development efforts as well as the companys overall technical strategy.
Rudder will move into his new role following the launch of Visual Studio 2005 and SQL Server 2005 in November, the company said.
In an e-mail to Microsoft employees describing the reorganization, Microsoft CEO Steve Ballmer wrote: "Were also announcing that Eric Rudder will be taking on a new role working directly for Bill, focusing on some of the companys key advanced development efforts as well as overall technical strategy.
"Eric has done a great job of driving broad usage of .Net with developers and has led incredible growth and success of the server and tools business."
Microsoft officials said that under the reorganization the new Microsoft Platform Products & Services Division will be led by Kevin Johnson and Jim Allchin as co-presidents; Jeff Raikes will be president of the Microsoft Business Division; and Robbie Bach has been named as president of Microsoft Entertainment & Devices Division.
Ray Ozzie will expand his role as chief technical officer by assuming responsibility for helping drive the companys software-based services strategy and execution across all three divisions, Microsoft said.
Rudder has been championed as the heir apparent to Gates by some observers, particularly in terms of his technology vision, should Gates ever step down.
"I dont think dev [the developer division] changes much if Rudders Server and Tools division is still intact within Kevins organization," said Michael Goulde, an analyst with Forrester Inc. who spent a few years as a strategist at Microsoft. "And Windows client and server are now more tied together than ever."
Meanwhile, Joe Wilcox, a Washington-based analyst with Jupiter Research of Jupitermedia Corp., said he thinks the reorganization positions Microsoft to launch a much bigger strategy based on its MSN brand.
"This means MSN gets a bigger role," Wilcox said. "It looks like Microsoft is taking Google, Salesforce.com and all those guys talking about Web 2.0 very seriously. I see MSN emerging as another development platform with a significant emphasis on services. And by aligning it with Windows, there will be services aligned with the core asset and protecting it."
Meanwhile, Microsoft also announced that Jim Allchin, former group vice president of platforms and newly announced co-president of the new Microsoft Platform Products & Services Division, will retire at the end of calendar year 2006.
Allchin has been Microsofts leading guru, defender and promoter of the Windows platform for years.
"This is a personal decision that Jim has spent a great deal of time thinking about and that I know was a difficult one for him to make," Ballmer said in his e-mail. "Jim and Kevin Johnson, who will succeed Jim, will serve as co-presidents until Jims retirement next year.
"I know I speak for the entire Microsoft family when I say how proud we are of Jims accomplishments here. Jim has had an immeasurable impact on our success. Millions of customers are able to realize their potential everyday thanks to software on which Jim was a key visionary and design architect. Of course, well celebrate Jims great contributions closer to when he actually retires."
Goulde said he will wait and see what the reorganization produces.
"The reorganization will do little or nothing by itself to accelerate decisions or speed time to market of products," he said. "How many layers of management are they taking out and what are they doing to empower program and product managers and reduce the number of reviews a plan has to go through before it gets a green light?
"On the other hand, Allchins retirement could have a profound affect on Microsofts future, as he is the strongest proponent of the Defend the Windows brand at all costs strategy. With Allchin gone, Hell could get flash-frozen."
In fact, in an interview with Allchin at last weeks Microsoft PDC (Professional Developers Conference) in Los Angeles, eWEEK asked him which is more important to the companys overall strategy: fostering Microsofts relationship with developers who build on the Microsoft platform, or protecting the Windows franchise. Allchin said the two go hand-in hand.
"Well, developers do want to touch a lot of customers," he said. "We have to make our platform very popular in order for them to do that. If we make their jobs easier then theyll be more likely to stay on the Windows platform. At the same time, we have to listen to them and forget about competitors in terms of the platform.
"Theres a bunch of old installed base systems that those customers often want to run on. So we spend so much time on app compatibility and reach… were trying to make their job easier, and I think thats a winning strategy for them and also for Windows. If they can have their application show up on a Smart Phone using Microsoft technology, and also show up on a Tablet and the Media Center and the regular desktop and make it simple for them, thats good for us."