SEATTLE -- In what has become almost an annual ritual, Microsoft's two top guns, Bill Gates and Steve Ballmer, returned with the company's latest reorganization plan.
Under what they called "the reinvention of Microsoft," the executives said they will split the company into five separate divisions, oriented around customer bases instead of products.
The reorganization creates six separate divisions run by vice-presidents who will report to Gates and Ballmer. Each division will have independent sales, marketing, and development resources.
"Each division has a clear set of competitors as well as customers," Ballmer said.
In a conference call Monday, the pair denied that the restructuring is related to the company's settlement talks with the Justice Department. They quashed speculation that the new structure is a blueprint for a possible negotiated split into so-called "Baby Bills."
"There's certainly no breakup of the company into smaller companies that I would find very acceptable, and we're certainly not thinking about that as a possibility," Ballmer said.
Nevertheless, both Gates and Ballmer said they remain interested in settling the antitrust case.
"We've certainly been interested in settlement even before the lawsuit was filed," Gates said. He declined to speculate on negotiations, and stuck to the company line that it is only trying to serve its customers.
Gates and Ballmer also outlined how their roles will change.
One former vice president, Brad Silverberg, declined a job as head of the consumer and commerce group, which oversees Microsoft's Internet properties. Ballmer said that Silverberg had opted instead to stay on as a consultant.
Instead, that division will be run by Brad Chase and Jon DeVaan, with Moshe Lichtman overseeing its international ventures.
Jim Allchin will run two departments, the business and enterprise division and consumer Windows divisions. Meanwhile, Bob Muglia will run the business productivity group and Paul Maritz will head the developer group.
Outside those five core groups, Microsoft is creating a home and retail products division under Robbie Bach, which will control products like games, keyboards, joysticks, and the Encarta encyclopedia.
In addition, the company dissolved its executive committee that it created in December 1996, replacing it with a "business leadership team." The new group is composed of a dozen executives who will spend one day every month with Gates and Ballmer.
The two execs said that changes won't be noticed by customers right away and that the long-delayed Windows 2000 will not be affected. They said they reorganized so the company could move beyond its goal of putting a Microsoft-driven PC on every desktop.
"It's a natural evolution for us and one that will make us more nimble," Gates said.
Microsoft reorgs are almost an annual event. Last Februrary, vice presidents were moved around in anticipation of the Windows 98/Internet Explorer integration. Two shifts came in 1996: the creation of the interactive media division in February and an October split into two groups. One was internet products and the other software for platforms and applications.
The company also reorganized in May 1995, when executive vice president Mike Maples announced his retirement.
Gartner Group analyst Chris Letocq said that the biggest part of Monday's announcement was selling this new customer-oriented focus to its own people.
"Can the the old guard learn new tricks?" he asked.
Gates and Ballmer said no job cuts are expected because of the reorganization.
