Server Chief Out At Microsoft, Is Steve Ballmer Next?

Less than two weeks into 2011, there are signs that Microsoft learned little from a woeful 2010. Can the CEO survive?

By Paul McDougall , InformationWeek

Last week I identified seven ways Microsoft can save itself in 2011. One of the most important, I wrote, was that CEO Steve Ballmer must bring management stability back to Redmond: "In the past 18 months, the entrance to Microsoft's corporate headquarters has revolved faster than the judge's panel on American Idol."

I guess Ballmer sings to his own beat. Exactly one week later, he's decided to remove Bob Muglia, a 22-year company veteran, from his role as head of Microsoft's Server and Tools Business unit, which includes Windows Server and related products.
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Ballmer was vague about the reasons. "This is simply recognition that all businesses go through cycles and need new and different talent to manage through those cycles," said Ballmer, in an e-mail Monday to Microsoft employees. Then came the inevitable follow-up. "In conjunction with this leadership change, Bob has decided to leave Microsoft this summer," wrote Ballmer. "He will continue to actively run STB as I conduct an internal and external search for a new leader."

If Ballmer's e-mail is to be taken at face value, it raises big questions about his management style. After all, Ballmer is saying he asked the head of one of Microsoft's most strategic units to step down even though he's got no immediate replacement lined up. It also means STB will have a lame duck at the helm for as long as six months, a very long time in the tech business.

But there are bigger questions about Ballmer's leadership.

Can it be coincidence that Muglia now joins former Business Division president Stephen Elop, former Windows strategy VP Mike Nash, former Entertainment & Devices president Robbie Bach, former Genuine Software program director Alex Kochis, former Windows group senior VP Bill Veghte, and chief software architect Ray Ozzie on the list of senior executives who have left, or announced their intentions to leave, Microsoft in recent months.

In the words of a former New York University professor of mine, the late, great Edwin Diamond, "No sparrow falls by accident." It's apparent to me that the company's top talent has lost confidence in Microsoft's ability to thrive and innovate in the post-PC era. As a group, they're realizing that stagnation is bad for their careers, and wallets.

Microsoft stock traded at about $28 five years ago; today it still goes for 28 bucks. Over the same half decade, Google shares have increased from about $465 per share to $600 per while Apple shares have jumped from $85 to $341.


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