Microsoft Shuffles Executive Deck Again

SAN FRANCISCO (03/24/2000) - Another spring, another reorganization for Microsoft Corp. But with talk of an antitrust settlement swirling, this shake-up could be profound.

No matter what happens with the U.S. Department of Justice, Microsoft as early as next week will put longtime executive Paul Maritz at the head of the company's charge to shift its dominance of the desktop to the wide-open Web.

Several top executives, including Windows chief Jim Allchin, will report to Maritz, according to company sources.

It's quite a turn of events. Last year, Maritz, a 14-year Microsoft veteran, was setting the stage for his eventual departure. After a reorganization in March 1999, Maritz placed day-to-day operational duties of his group, which handles relations with software developers, in the hands of David Vaskevitch, a vice president in Maritz's group.

But company sources say top executives persuaded Maritz, who tends to shun publicity, to lead a larger portion of the company that will direct the transition from software to Web-based services. This entails the vast challenge of making Windows and its related technologies the backbone of the online world, a world in which Microsoft already has encountered many obstacles.

In speculative discussions of a government-ordered breakup, Maritz's name often surfaces as a potential leader of a spun-off company, or "Baby Bill." His reascension in the coming shake-up could be a prelude to such a scenario, though it's unclear if the U.S. government still insists that a fractured Microsoft be a settlement condition.

Microsoft built its empire by giving software developers a broad target audience. In other words, the dominance of the company's Windows operating systems makes it an easy decision for developers to build Windows applications.

But as developers build a growing number of applications such as e-mail, e-commerce, scheduling, and file storage for the Web, Windows is in danger of becoming superfluous. That's where Maritz and his developer expertise comes in.

During the past year, his group has worked on ways to keep developers devoted to Windows while giving them the tools they need to build Web applications.

It's a delicate balance.

The reorganization, originally scheduled for this week, was delayed at least a week, perhaps because of an approaching antitrust settlement. The shakeup also will streamline the company's sprawling marketing efforts. For example, disparate Web sites that support different product groups will be placed under one umbrella -- a much-needed move in a company that is pushing 35,000 employees worldwide.

The reorganization is not surprising; Microsoft shakes up the ranks at least once a year as a matter of course. But this time, much more is on the line. The company has lost top talent in all sectors, and with intimate knowledge of their former employer's modus operandi, many of the defectors are starting businesses that directly or indirectly compete with Microsoft.

Still, the ultimate reorganization could be at hand. With Judge Thomas Penfield Jackson on the verge of handing down his ruling in the antitrust case -- widely expected to be in the U.S. government's favor -- Microsoft could be swayed toward a settlement. If so, a breakup is not out of the question.

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