Top Microsoft exec departs amid reorganization

Rick Belluzzo, Microsoft Corp.’s president and chief operating officer (COO) and a force behind the growth of its .Net, Xbox and MSN efforts, is to leave the company, Microsoft said Wednesday.

Belluzzo, 48, will step down as president and COO on May 1 and leave the company in September. No specific reason was offered for his departure. The move came as part of a broader reorganization intended to give greater autonomy to the executives in charge of Microsoft’s various product groups, the Redmond, Wash.-based, company said in a statement.

As part of the changes, Microsoft will be divided into seven business units: Windows Client, Knowledge Worker, Server and Tools, Business Solutions, CE/Mobility, MSN and Home and Entertainment. The leaders of each unit will have “comprehensive operational and financial responsibility and greater accountability,” Microsoft said.

Belluzzo, a former chief executive officer (CEO) at Silicon Graphics Inc., joined Microsoft in September 1999 as vice president of its consumer group. As president and COO he has overseen Microsoft’s worldwide sales and marketing, directed its human resources, finance and licensing operations, and overseen its efforts in the area of computer games and TV platform software.

No replacement was named right away.

Belluzzo appears to have been the victim of an internal turf war, said Rob Enderle, a research fellow with Giga Information Group Inc. and a longtime Microsoft watcher. With the economy on the slide, Belluzzo had been charged with making cutbacks at Microsoft’s various business units, Enderle said. Senior managers of those units probably rebelled against the idea of a relative newcomer deciding where cuts should be made, and Belluzzo apparently lost out in the conflict.

His position, which had been closer to that of president than COO, became more like that of a “glorified administrator . . . and that wasn’t acceptable to him,” Enderle said. At one time Belluzzo had been tipped as a potential future successor to Ballmer, he noted.

Customers who depend on Microsoft products should have no reason to lose sleep over the departure, he added. Belluzzo was more involved with running Microsoft’s business than with the development of any of its products, he said.

Another analyst agreed that Belluzzo’s departure will be no great loss.

“I don’t think it’s a particularly significant blow to Microsoft,” said David Smith, a senior analyst with Gartner Inc., a research company in Stamford, Conn. “It’s hard to put your finger on anything he’s done that was particularly spectacular.”

Belluzzo may have helped to revive Microsoft’s MSN online service, but the unit is “still not what you’d call tremendously successful,” he said. The executive also doesn’t appear to be closely involved with the development of .Net, a key project for the company that involves retooling its products to allow for the delivery of software and services over the Internet.

“There’s a definite culture clash between Rick and the company,” Smith said. “He’s very soft-spoken. I don’t think that gets you very far at Microsoft.”

Belluzzo worked with Microsoft’s top brass to reorganize the company in a way intended to improve its internal structure and position it for faster growth. Out of that came the decision to make Microsoft’s various business unit leaders more in control of — and more accountable for — the groups they lead, Microsoft CEO Steve Ballmer said in the statement.

“Given where Steve (Ballmer) and I knew we needed to take the business, I decided it was the right time to pursue my goal of leading my own company,” Belluzzo said in the statement.

Bill Gates, Microsoft’s chairman and chief software architect, said in a statement that Belluzzo made “important contributions” to the company. In particular, his work on improving internal business processes and his role in the development of .Net, Xbox and MSN were “very significant contributions,” Gates said.

The announcement was made after the U.S. markets had closed. Microsoft’s shares on the Nasdaq ended the regular trading day down 1.69 per cent, at US$56.33. The stock held fairly steady in the after-hours markets, inching up 0.73 per cent to US$57.00 at the time of this report, according to the Island trading network.

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