Microsoft has put its top sales executive into a
fledging new division on Thursday in a move that analysts read as a
sign of a broader management changes ahead at the world's largest
software maker
Orlando Ayala, Microsoft's No. 3 executive and group vice
president of sales, will head a new group that will sell software
to small to medium-sized businesses, a market that Microsoft
believes will grow to $10bn in sales by 2010.
"The small and mid-market is a vastly underserved customer
segment with huge growth opportunities," Microsoft chief executive
Steve Ballmer said in a memo sent to employees on Wednesday, "But
there is still a lot of work we need to do in this space."
Ayala will now report to another group vice president, Jeff
Raikes, who heads the Microsoft segment that includes the Office
suite of products, instead of reporting directly to Ballmer. Ayala
said the opportunity to head a crucial division was not one he
could pass up.
"This is what I wanted to do," Ayala told Reuters. "In my
current job it's a very horizontal position. This is a chance to go
deep into a division ... I can't be more proud than to be picked as
the one to take the company into a new era."
Ayala said he will remain a member of Microsoft's core business
leadership team, which charts the Redmond, Washington-based
company's strategy.
Given that Ayala is one of Ballmer's most trusted lieutenants,
Matt Rosoff, analyst at independent researcher Directions on
Microsoft, said that Ayala's move was unlikely to be seen as a
demotion.
"He's seen as a can-do guy and they have a high-priority project
that they have to execute," Rosoff said.
Ayala will head a new global sales and marketing group targeting
small and medium-sized businesses called "Small and Mid-Market
Solutions & Partners" that will be backed by a $2bn
investment.
Microsoft has already spent more than $2.5bn buying smaller
software companies Great Plains and Navision that specialize in
small- and mid-sized business software.
Smaller companies are, increasingly, using computers to track
everything from sales contacts and customer information to payroll
and accounting, but the market is highly fragmented and other
software heavyweights, such as Oracle and Siebel Systems, are also
targeting the space.
Shake-up at the top
Since replacing co-founder and Chairman Bill Gates as chief
executive officer, Ballmer has been tinkering with Microsoft's
management structure for the last three years.
Microsoft has yet to name a chief operating officer, a position
that became vacant nearly a year ago with the departure of Rick
Belluzzo, who left to head Quantum.
Analysts have said that too many executives were reporting
directly to Ballmer, creating problems with retaining a team of
senior executives just below the CEO.
Asked if he would be replaced by another top sales executive,
Ayala declined to comment, saying the current structure of
Microsoft's stand-alone sales group could be under review.
"It is really Steve's domain," Ayala said, "He is saying that he
will think about strategy along the segment lines."
In the middle of 2002, Microsoft started to report revenues
according to seven different product segments.
"If they start to move the sales organization into the product
groups, that already reduces the number of direct reports to
Ballmer," Rosoff said.
Ballmer said Doug Burgum, head of the Business Solutions group
that creates software for small- and mid-sized businesses, would
remain in his current role and continue to report to Jeff
Raikes.
"Microsoft is recognising the size of the opportunity to have
someone of Orlando's experience and stature to come over to help
drive this effort," Burgum told Reuters.