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.
Apparently feeling a bit bedeviled in the coverage of the collapse of the second round of Yahoo acquisition talks, Microsoft revealed the details of their proposed "alternative transaction" via a memo to employees from Kevin Johnson, president of the platforms and services division, which was promptly leaked to the press. The gist:
Microsoft projected that this deal would increase Yahoo’s annual operating income by more than $1 billion above its current level although some of that depends on the cost savings of shuffling the search hardware, employees, and operations off to Microsoft.
I suspect that while the money is important, the real sticking point is that the Microsoft deal has Yahoo merely displaying a "white label" search service provided by Microsoft, while the Google arrangement leaves Yahoo in control of their search service and merely dealing with Google for monetization. In many ways, search is just another form of content and if Yahoo has a new determination to succeed in the content business, selling a major chunk off to Microsoft is a poor way to start.
Microsoft today made an omnibus executive rearrangement announcement covering a variety of Corporate and Senior Vice Presidents. Here are the novel aspects from my perspective:
Last week, the aQuantive shareholders voted their approval of the company’s acquisition by Microsoft (as well they might since the offer was roughly twice aQuantive’s market cap). Today, Microsoft announced completion of the acquisition and the creation of a new Advertiser and Publisher Solutions Group with former aQuantive CEO Brian McAndrews as the newly anointed Microsoft Web Ad Czar.