Microsoft today announced that they had persuaded Yahoo’s Dr. Qi Lu to sit in the hot seat at the head of their Online Services Group which had been glaringly empty since the departure of Kevin Johnson in July:
Microsoft Corp. today announced that Dr. Qi Lu will join the company as president of the Online Services Group. Dr. Lu will lead Microsoft’s efforts in search and online advertising and all the company’s online information and communications services. Dr. Lu will report to Microsoft Chief Executive Officer Steve Ballmer.
Lu, 47, most recently served as executive vice president of Engineering for the Search and Advertising Technology Group at Yahoo!, where he was responsible for development efforts around Yahoo!’s Web search and monetization platforms. Dr. Lu left Yahoo! in August 2008 after 10 years of service.
Without trying to allocate blame, I can’t help but observe that if Yahoo had a decent "Web search and monetization platform" they wouldn’t be in the difficult situation that they currently find themselves where selling some of their search keywords to Google looked like a good deal..
Lu’s first day at Microsoft will be Jan. 5, 2009. In his role running the Online Services Group, he will oversee several groups including the Advertiser & Publisher Solutions business, managed by Scott Howe who was promoted to corporate vice president; the Online Audience business, managed by Senior Vice President Yusuf Mehdi; OSG Research & Development, managed by Senior Vice President Satya Nadella; and OSG Finance, managed by Rik van der Kooi who was promoted to corporate vice president.
The Advertiser & Publisher Solutions business had been run by Brian McAndrews who came to Microsoft with the acquisition of aQuantive and had been rumored to be moving up in the Microsoft hierarchy, but he didn’t get to be head honcho and is now moving on:
With the successful integration of aQuantive now complete, Brian McAndrews, former CEO of aQuantive and senior vice president of Microsoft’s Advertiser & Publisher Solutions Group, has decided to transition out of Microsoft, and will do so over the next several months, serving in a consultative capacity to Steve Ballmer and Qi Lu during that time.
One interesting tidbit is that the advertising salesmen so beloved of previous Microsoft online executives have been shifted:
As part of today’s announcement, several teams will move to further align resources. The field sales organizations in the Online Services Group will move to Microsoft’s centralized Sales, Marketing and Services Group led by chief operating officer Kevin Turner. This group, called Consumer & Online, will be led by Corporate Vice President Darren Huston and will include the Global Advertising Sales and Services organization, led by vice president Bill Shaughnessy.
So Dr. Lu will not be distracted by mundane commercial considerations which is fine given his engineering background and presumably he has made that distinction clear to CEO Steve Ballmer. However, eventually it will come down to the bottom line no matter how much the Microsoft online properties glitter from a technical perspective.
Microsoft’s online deck chairs have been in disarray since the departure in July of Kevin Johnson, but they got a new arrangement this week with veteran SVP Yusuf Mehdi picking up responsibility for MSN and Microsoft’s search properties. The best line award goes to Angela Gunn at BetaNews who opines:
Yusuf Mehdi is the new number-two for Microsoft’s Online Services division — but, as The Prisoner would be the first to ask, who is Number One?
A curious question, but par for the course of Microsoft’s online efforts.
Medhi, formerly Senior VP of Strategic Partnerships, has shifted his responsibilities from mergers and acquisitions to MSN and Microsoft’s search properties. He takes most of the job’s marketing and search tasks off the plate of Bill Veghte, the senior VP now focusing mainly on the Windows and Windows Live groups; Veghte picks up a new title, Senior Vice President for the Windows Business.
But Medhi isn’t stepping into the top spot for the online properties group, leaderless since Kevin Johnson jumped for Juniper Networks in the wake of the failed Yahoo acquisition. That leader will be…
…announced at some later date, says Microsoft. For now, Mehdi joins two senior VPs tasked with interim division leadership: Brian McAndrews, who manages the Advertiser and Publisher Solutions Group, and Satya Nadella, head of the Search, Portal, and Advertising Platform Group.
Until a new Online Audience Business head is hired, the three will report to CEO Steve Ballmer, who’s said to be still seeking a high-profile “get” — internal or external — for the top spot. A Microsoft spokesperson confirmed to BetaNews Tuesday afternoon that the search is still most definitely on for that person.
Mr. Ballmer is apparently asking volunteers to step forward and everyone is taking one step back. I’d suggest an immense signing bonus and a similar golden parachute.
Up until today Kevin Johnson was the president of Microsoft’s Platforms & Services Division (PSD) which develops Windows and Microsoft’s online properties including Windows Live and MSN. Now Kevin Johnson is out and PSD has been split into two pieces reporting directly to Microsoft CEO Steve Ballmer:
Microsoft Corp. today announced that the Platforms & Services Division (PSD) will be split into two groups: Windows/Windows Live and Online Services, with both groups reporting directly to CEO Steve Ballmer. Microsoft also announced that PSD President Kevin Johnson will be leaving the company. Johnson will work to ensure a smooth transition.
Effective immediately, senior vice presidents Steven Sinofsky, Jon DeVaan and Bill Veghte will report directly to Ballmer to lead Windows/Windows Live.
In the Online Services Business, Microsoft will create a new senior lead position and will conduct a search that will span internal and external candidates. In the meantime, Senior Vice President Satya Nadella will continue to lead Microsoft’s search, MSN and ad platform engineering efforts.
In addition, Senior Vice President Brian McAndrews will continue to lead the Advertiser & Publisher Solutions Group (APS).
So was Johnson pushed or did he jump? The rumor is that Johnson is now going to run Juniper Networks, which while nice enough, doesn’t seem like a sufficient opportunity to justify a voluntary departure so the smart money is on pushed.
One problem could have been Vista’s lackluster reputation, but Microsoft is still printing money with Windows so a more likely cause is the continuing disappointment from Microsoft’s online efforts. I’m sure it also didn’t help that Johnson was the point man on Microsoft’s attempt to buy Yahoo (or pieces thereof) which appears to have finally come to naught.
As for what it all means, I see no reason to expect significant changes in either products or financial performance – it was merely a rearrangement of the deck chairs which won’t be complete until new executives heading the two groups are named (assuming that Steve Ballmer doesn’t really want to run Windows/Windows Live himself). Any expectations of radical alterations are clearly premature.
This week, Microsoft announced the acquisition for an undisclosed sum of Navic Networks of Waltham, Mass., a privately held company with about 80 employees specializing in addressable advertising and interactive television applications. Much press comment has been to devoted to the interactive television technology which, for example, would let a user interactively request more detailed information during a commercial. This seems unlikely to me, but then I find it hard to believe that viewers sit for hours watching the home shopping networks.
The real pony to my mind is in the addressable advertising – via cable or satellite set top boxes Navic’s technology can individually address each consumer household, monitor what channel they are watching, and deliver targeted advertising on an individual household basis. Moreover, as Benjamin Romano reports at the Seattle Times, "Navic’s technology reaches some 35 million digital set-top boxes in North America via cable providers including Charter Communications, Cox and Time Warner."
With that kind of demographic information, Navic surely has a leg up in selling advertising although they do have to share the booty with the cable and satellite operators. It’s not all a bed of roses though, as the cable operators have also formed Project Canoe to sell targeted ads themselves while Google TV has partnered with Dish Network to do the same thing.
Still, the big question is why Microsoft wants to be in this business. Brian McAndrews recites the current Microsoft mantra, "In the long run, we want to be a platform across all media," but that only begs the question of whether the ad biz is really the most profitable investment for Microsoft’s cash.