MSN Meltdown: Kevin Johnson shuffles PSD, round one

Executives have been dropping like flies (flies that are only taking a break! Honest!) at MSN. The Microsoft division is sinking as Microsoft's Live project takes over.

Now Kevin Johnson, the newest of the Microsoft beast's eight heads, has issued a decree to his entire organization. Johnson's memo to the Platforms and Services Division lays out his plan for MSN, Windows Live, and his other fiefdoms.

A source inside PSD leaked the missive — an introductory memo followed by an outline of the reorg. Johnson's main points:

Windows Vista + Windows Live = the future.
Windows Live — oh, and you too, MSN — will enjoy a growing online advertising industry.
"Our software + service approach and the expertise we have built in MSN can support innovation agility as we enable the Live era." In other words, "Thanks for training the next generation. Don't let the door hit you..."
Jim Allchin is still Johnson's co-president. He'll run the "dining with bloggers" department.

After the jump, the first part of Johnson's memo.

Earlier: MSN Meltdown: Senior VP David Cole forced out, Yusuf Mehdi is next [Valleywag]
And: MSN Meltdown: Michael Rawding quits [Valleywag]


Since taking on my new role last September, I've spent quite a bit of time focused on how best to position the Platforms and Services Division (PSD) for the future. I want to share with you some of that thinking and some new changes we are undertaking today.

We continue to see a strong wave of innovation from Microsoft making its way to market. PSD is a big part of this wave. The recent launches from our Server and Tools business, including SQL Server 2005, Visual Studio 2005, BizTalk 2006 and Windows Server R2, have been well received by customers and partners, and the team is now focused on Longhorn Server. The Windows client team continues to drive forward on Windows Vista with the latest CTP that was released in February. The MSN division continues to deliver new innovation such as Live Mail, Live Messenger, our constantly improving search offerings and many other Windows Live offerings. MSN itself has enabled new channels and content and continues to expand. All of these product and service releases are evidence of a strong wave of innovation and momentum in the market.

Over the last few months, I've made it a priority to listen to what's on people's minds. I have had the opportunity to conduct more than one hundred 1:1's and have met with over 2,000 of you at all-hands meetings and roundtables. Not surprisingly some common themes have emerged. Your questions, concerns and feedback, taken together with the dialogue within our leadership team pointed to the need to address three key questions for our division:

* What are the next steps for advancing our vision of software + services?
* Are there growth opportunities upon which we should be more focused?
* How can we be more agile?

As our current product pipeline hits the market, it's a good time to lay the foundation for the future of PSD. I have been working with Jim Allchin and other PSD leaders to establish an organization that positions us for the future. This has been a very collaborative process and we have considered many options. The PSD organization changes we are announcing today are driven by the following objectives which are rooted in the input I've received from so many of you:

1. Software + Services: Position for the next wave of innovation relative to our vision for Windows Live. Ray Ozzie and I continue to work closely to advance the Live vision announced last November. End-to-end scenarios that enable seamless experiences across client, server, and services are critical for all customers, and Windows Vista + Windows Live begins to address this vision. Utilizing services as a distribution vehicle for user experiences enables us to embrace the concept of software + service and deliver innovation to market faster. Doing this requires us to think about the Windows Live platform as a key to the value proposition we deliver to developers. These changes provide clear connections with Ray and his team to help shape the Live platform, Live experiences and the marketing that supports Windows Live.

2. Growth: Focus on the key growth opportunities ahead of us, specifically online advertising, emerging markets, and enterprise computing infrastructure. Our Server & Tools business has shown strong growth over the last few years, and has great opportunities to continue that momentum. Windows Client has growth opportunities in premium offerings, new solutions for emerging markets, and in reducing unlicensed PCs. Certainly the upcoming launch of Windows Vista will spark a new wave of growth across our broader industry and partner ecosystem. Analysts predict the online advertising industry will grow to $35B+ by 2008 which creates opportunity for our MSN and Windows Live businesses.

3. Agility: Lay the foundation for accelerating our pace of innovation, including focusing on ways to improve clarity of decision making, drive greater accountability, and reduce layers in the organization so we can move faster. It also means utilizing existing expertise within the division to embrace services — and rapid release cycles that services can enable — to all aspects of our business. Our software + service approach and the expertise we have built in MSN can support innovation agility as we enable the Live era.

As part of the next step of Jim's transition, we discussed when it was appropriate to move his direct reports to me, and decided that this organization change was the right time. Jim's overall partnership role with me in running PSD will not be changing.

The PSD leadership team I've put in place to align against these key objectives includes:

Steven Sinofsky , SVP Engineering, Windows and Windows Live Group
Brian Valentine , SVP COSD
Blake Irving , CVP, Windows Live Platform Group
David Cole , SVP, Online Business Group
Yusuf Mehdi, SVP, Chief Advertising Strategist
Mike Sievert , CVP Windows Client Marketing
Will Poole , SVP Market Expansion Group
Bob Muglia , SVP Server and Tools Business Group
Sanjay Parthasarathy , CVP Developer and Platform Evangelism
Brent Callinicos , CFO and CVP Finance Group
Rick Thompson, CVP supporting a special assignment
Darryn Dieken , Technical Assistant
Brian "Skip" Schipper, GM Human Resources
Mary Snapp , CVP and Deputy General Counsel, Legal and Corporate Affairs

I know change is never easy but I truly appreciate the focus that people throughout PSD have on innovation and the wave of products and services our team is delivering to the marketplace is impressive. These changes are intended to help us increase our agility, embrace the concept of software + services, and position us for an exciting future together.

Let's continue to impress customers and partners with our innovation, and drive satisfaction to levels we've never achieved before. Let's also stay focused on our priorities as we make this transition and align our organization for the future.

For those of you who will be on campus in Redmond on Friday, March 24, I hope you can join me in person, in B33/McKinley Room, from 10:00 11:00am. The meeting will start promptly at 10:00 a.m., so please plan on arriving a few minutes early to ensure you get a seat.

I hope everyone else will watch the webcast, which will be streamed live on the intranet and archived there for later viewing.

Whether you attend in person or via the Net, y ou can submit your questions to [redacted]@microsoft.com before the meeting begins.

Thank you for your contribution and your continued focus on innovation and our customers.

Kevin