Microsoft (MSFT)
The Microsoft Corporation has announced a big change in its mobile and gaming department. Its current division President, Robbie Bach, will be retiring this fall. As a result, Microsoft is faced with the dilemma of finding a suitable replacement, or so most people thought. However, Microsoft has decided to streamline its corporate hierarchy rather than fill Bach’s position. Instead, the Windows-software creator eliminated the Department President role all together, and will have the Senior Vice President of the Mobile Division Andy Lees and the Senior Vice President of the Gaming Division Don Mattrick report to directly to the Chief Executive Officer Steve Ballmer. What exactly does all this mean for Microsoft and its investors?
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Microsoft realizes that internal changes need to be made in order to remain competitive. While the gaming-side of the department has had its share of bumps and bruises, overall it is a profitable business segment for Microsoft. The gaming division also has a some future project releases such as Project Natal coming up that have Microsoft optimistic about future performance. Microsoft seems content with letting the gaming division run its course for the time being before making any major process adjustments. However, the same cannot be said for the mobile side of the department. The mobile business segment has been struggling tremendously, and has been outright dominated by Google (GOOG: Charts, News, Offers) and Apple (AAPL: Charts, News, Offers) over the past years. It is no secret that mobile computing and smart phones is a booming and growing market. So, why is Microsoft being so conservative with making changes to the mobile division?
Yes, Microsoft’s decision to have the mobile and gaming division leads report directly to Mr. Ballmer seems to be a reflection of how important these departments are to Microsoft’s future success. The hierarchy adjustment will also offer a sense of motivation and urgency for the mobile and gaming department, which may bring out the best in its employees. However, at the end of the day, not much has changed. Any Lees was basically running the mobile division before, and will continue to do so now. Maybe Microsoft knows more than it is telling the public. The mobile division has been working very hard on Windows Mobile 7, and Microsoft may be confident that Windows Mobile will be able to turnaround the division. It seems like Microsoft wants to give the mobile division an opportunity to see its product to market before making any hasty decisions.
Microsoft has its back against the wall in the mobile market. It needs to make a big push before its opportunity in the mobile industry is completely taken away by its competitors. Microsoft seems to believe that Windows Mobile 7 will be able to do this. The software juggernaut is giving its mobile team the chance to see the Windows Mobile 7 project all the way through to the end. Microsoft is hoping that by having the mobile and gaming department report directly to the CEO it will help make Windows Mobile 7 a success. If the Windows Mobile 7 launch does not bring about the expected results, Microsoft may need to look outside the company for a solution.
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