Windows Phone Predictions, Elop Departure, BPOS Outage Marked Microsoft Week

Microsoft's post-Labor Day week was marked by the sudden departure of Business Division president Stephen Elop, a BPOS outage, and a Windows Phone prediction by research firm IDC.

Microsoft ended its post-Labor Day week with something of a major personnel shakeup: Stephen Elop, president of the company's Business Division, stepped down to become CEO at Nokia.

"I am writing to let you know that Stephen Elop has been offered and has accepted the job as CEO of Nokia and will be leaving Microsoft, effective immediately," Microsoft CEO Steve Ballmer wrote in a Sept. 9 email to company employees. "Stephen leaves in place a strong business and technical leadership team, including Chris Capossela, Kurt DelBene, Amy Hood and Kirill Tatarinov, all of whom will report to me for the interim."

While Microsoft and Nokia have collaborated on porting the former's Office software onto smartphones, starting with Nokia's Eseries, the two companies' mobile platforms also compete in the broader marketplace. Microsoft and its manufacturing partners are readying Windows Phone 7 for release this fall, even as Nokia prepares new devices of its own.

Elop is the latest in a string of Microsoft executives departing Redmond. In May, Bill Veghte-once the senior vice president of the global Windows business-joined Hewlett-Packard as executive vice president of its Software and Solutions Business. A little while after that, Alexander Gounares-corporate vice president and CTO of Microsoft's online services division-departed to become AOL's CTO.

Still later in May, Microsoft's Entertainment and Devices (E&D) Division, responsible for consumer products such as the Xbox and Zune media player, underwent a shakeup that saw the departures of Robbie Bach, the unit's president, and J Allard, its senior vice president of design and development. "I am making several organization changes to ensure we have the right leaders in the right positions as we set ourselves up for the next big wave of products and services," Ballmer purportedly wrote in an internal memo that leaked online.

Whether their departures stem from a desire to climb the corporate ladder somewhere else, or a broader shakeup forcing them from office against their will, it's hard to imagine that the executive leavings aren't having a seismic internal effect on Microsoft. With Elop's departure, Ballmer now has more direct oversight of both the Business and E&D divisions, at least until new high-level executives are slotted in.

Under Elop, the Business division pulled in $5.3 billion during the most recent quarter, suggesting that both enterprises and SMBs (small and midsize businesses) are starting to spend on software after several quarters of slashed IT budgets. It also launched Office 2010, its next-generation productivity suite.

In a Sept. 10 statement, Nokia suggested that Elop's managerial skills would be key to reviving Nokia's fortunes in the smartphone space, where it has lost ground to the likes of the Apple iPhone and Google Android.

"The time is right to accelerate the company's renewal; to bring in new executive leadership with different skills and strengths in order to drive the company's success," Jorma Ollila, chairperson of the Nokia Board of Directors, wrote in that statement. "The Nokia Board believes that Stephen has the right industry experience and leadership skills to realize the full potential of Nokia."

If a new research note from IDC proves prescient, however, Elop could have a hard road ahead. The research firm is predicting market-share increases for both Windows Phone and Google Android through 2014, while that of Nokia's Symbian platform, Apple iPhone, and BlackBerry OS all experience varying degrees of dip. Overall, however, the smartphone market will likely continue to grow by proverbial leaps and bounds.

"The smartphone is the catalyst behind the rebound in the worldwide mobile phone market this year," Kevin Restivo, an IDC analyst, wrote in a Sept. 7 statement. "Additional product introductions and an expected flurry of smartphone buying activity in the second half of the year will push the market well above previous expectations."

In the non-smartphone realm, Microsoft also confirmed this week that it will release a public beta of its Small Business Server "7" by the end of the month. The platform is meant to complement Microsoft's two upcoming servers, code-named Vail and Aurora, which were released in preview-build form in August.

"We can confirm that SBS 7 will reach public beta by the end of September," a Microsoft spokesperson told eWEEK Sept. 7.

Small Business Server "7" will likely receive a more formal name ahead of its release. Microsoft claims the platform will support up to 75 Client Access Licenses, perform automatic server backups, and allow IT administrators to organize and access files from off-premises. More information about the platform can be found here.

Although Microsoft's current business strategy is to focus more and more on the cloud-something Elop was known to discuss at great length, at least before his departure for Nokia-a sizable number of corporations rely on on-premises IT infrastructure. Microsoft has been working to strengthen its cloud offerings in recent months, even as recent Business Productivity Online Standard Suite (BPOS) outages suggest some kinks still need to occasionally be worked out.