By Bill Rigby and Eric M. Johnson
REDMOND, Wash., Sept 8 A mood of cautious
optimism tempered with a dash of anxiety has spread on Microsoft
Corp's leafy campus in the Seattle suburbs, as the
world's biggest software maker embarks on one of the most
tumultuous periods in its 38-year history.
Since mid-July, three interlocking events - all of them
considered highly unlikely six months ago - have unfolded in
quick succession, unsettling Microsoft managers and employees
and roiling its share price.
First, CEO Steve Ballmer rejiggered top management as part
of an ambitious plan to remodel the company around devices and
services rather than software. Six weeks later, he announced his
retirement within a year, sending shares soaring. Ten days after
that, he unveiled a $7.2 billion purchase of Nokia's phone
business, a move that ate up the stock's recent gains.
Within the company's Redmond, Washington, headquarters at
least, the casually dressed workers seem much more worried about
the far-reaching reorganization announced by Ballmer than the
multibillion-dollar Nokia acquisition, which has incensed many
investors who view it as a waste of money.
"The funniest thing I read on LinkedIn was, 'Two black holes
converge,'" said one Microsoft employee, who asked not to be
named, soon after the Nokia acquisition was announced. "But I
think there's some real potential here."
The topic of Ballmer's retirement elicited a more complex
reaction from some Microsoft employees interviewed this week.
"Like Wall Street, there was initial euphoria with the
announcement for employees," said one 15-year veteran who has
worked in a number of units at the company, in response to
Ballmer's retirement and a change at the helm of a company that
no longer sets the pace for technological innovation.
"But he is as much a symptom as the actual problem. This
whole crazy re-org will still happen. And nothing will really
change." he said. "Among many of my fellow employees - both new
hires and long-timers - there is a recognition that Microsoft
has lost its way."
Microsoft declined comment on the mood of its employees.
One of the ways the company aims to regain its stride is the
addition of Nokia's phone business, but that will likely
complicate an already complex reorganization that is just
getting under way.
"The re-org is more unsettling for some people than
Ballmer's departure. Exactly how that shakes out is more
interesting," said another employee who asked not to be
"There is always a small percentage of people who do lose
their job, or get put into an awkward new role. For those
people, morale is very bad, of course. But whoever you talk to,
they all noticed that the stock went up on the Ballmer
(retirement) news. If sustained, that will make morale improve
FOUR NEW GROUPS
Under Ballmer's 'One Microsoft' vision - which will take
until the end of the year, at least, to complete - Microsoft's
five operating units, including the massive Windows and Office
businesses, are being realigned under four new functional
engineering groups, broadly covering operating systems, devices,
applications and the cloud.
In practice, that means tearing up some existing units and
shifting thousands of staff around campus. The old Windows
business will largely go into the new operating systems unit,
but the Surface tablet unit will go into the new devices
organization, to be joined by Nokia's phones next year. Office
will be split between the applications and cloud units.
Most advertising and marketing staff are being taken out of
their traditional business units and grouped together under a
unified team. The software parts of Xbox will go to operating
systems while the hardware will go to the devices unit, but not
until after the Nov. 22 launch of the Xbox One console.
Given the complexity, the full effects of the reorganization
may not be felt for several more months.
"I guess the re-org hasn't yet settled down in a big way,"
said Raman Shrama, 34, who works at Microsoft as a program
manager in the developer division, which helps outside firms
make apps to run on Microsoft's Windows 8.
"I am personally not very impacted, because the division
that I am working in is largely unchanged," said Shrama at the
Overlake Transit Center used by thousands of Microsoft
Generally, he said, the mood at the company was good.
"CEOs don't change every day. It's a big event, for sure. But I
haven't noticed a drop in morale, or anything like that."
Microsoft's Redmond campus has maintained its laid-back air
for the last few weeks. Crowds occasionally gather for
morale-building events on one of the artificial-turf soccer
fields. And in The Commons - the campus social hub - a few
hundred employees congregate upstairs for the rowdy 'Trivia
One 31-year-old contractor who works on the Office user
interface team said he was "very optimistic" about the changes.
"We are so far behind on the mobile end of things. This is
the only hope we have for connecting to the younger generation,"
he said. "The PC market is declining so much. This might give us
a chance to find a new approach and a new corporate identity to
get behind. I don't think Ballmer was really that inspirational,
someone people believed in."
Another 25-year-old software engineer in the Bing search
engine unit said she was "excited" about what was to come.
"I don't expect a big change after his (Ballmer's)
retirement. Microsoft is a big company. A new CEO won't change
much," she said. "In the last company meeting, Steve talked
about the 'One Microsoft' spirit. People liked that idea.
Probably, the new CEO will continue that."