Ballmer fires Microsoft head of servers, clouds; leaves his own head alone

Bob Muglia will go on to 'other opportunities;' Microsoft may not

The head of the product division most important to its enterprise IT customers is leaving Microsoft this summer for unnamed "other opportunities."

Usually that kind of description comes at the top of a story in which some vendor exec is being fired for some horrible indiscretion -- usually failing to make as much money as the CEO would have liked by following a strategy the CEO imposed.

In the case of Bob Muglia, 23-year veteran of Microsoft and head of its critical Server & Tools Business (STB) will leave this summer, running the company's third-largest division as a lame duck for half a year, while his boss, Steve Ballmer looks for a replacement, according to a note Ballmer sent to Microsoft employees earlier today.

In October, when Ray Ozzie, one of Microsoft's dwindling number of brain trust members, retired, Ballmer sent out a friendly "we're sorry to see him go, but my buddy has decided to retire" note to employees.

For Muglia the tone was much more direct.

"Bob Muglia and I have been talking about the overall business and what is needed to accelerate our growth. In this context, I have decided that now is the time to put new leadership in place for STB," the memo read.

While Ballmer noted Muglia's successes, it was clear he'd made the decision, not Muglia, out of dissatisfaction with the performance of either Muglia himself or the division.

The slight isn't fair to Muglia, who has taken on many of the toughest slogs at Microsoft, often turning them into highly successful, if not absolutely dominant, businesses. He started out running the SQL Server business, and went on to run the developer program, mobile devices, Windows NT and online services.

He was put in charge of the server division two years ago in what observers called a remarkable comeback, after being demoted to run the management software group in the wake of the failure of the "Hailstorm" or "My Services" online services offering.

Hailstorm was designed as a set of online services that look very much like SAAS or a cloud, but collapsed in a series of disputes about privacy and security.

Ballmer promoted Muglia again a year ago, making him one of just four divisional presidents and adding the Azure Services Platform to his portfolio. Since then the presidents of the entertainment and business software divisions have also left, in addition to Ozzie.

Some speculators tag Muglia with the failure of Azure to overcome Amazon Web Services as the leading external cloud service, or with not pushing the server division quickly enough toward the cloud.

Others note Muglia's consistent support of cloud in general and Azure in particular, but don't pint to a specific failing that may have prompted Ballmer to act.

Given the brain drain Microsoft has been suffering during the past few years, and it's lackluster showing at CES and in competition in nearly every area of its business, there's a limit to how much blame can be pinned on Muglia.

Microsoft has lost a lot of ground to companies like Amazon, Rackspace and others moving aggressively into the market for cloud-based services, but not usually for technical reasons.

More of the holdup has come from bits of archaism like keeping licenses yoked to a particular physical machine, failing to strike a balance between offering apps as services online and letting VARs sell them directly, "innovating" instead of innovating, following the competition (and doing it badly,) and failing to make a convincing case that Windows can or should survive as a desktop/tablet/smartphone operating system for the forseeable future.

Muglia may have taken part in discussions on many of those questions and may have slowed some of them down, from Ballmer's perspective.

The problem isn't within Muglia's portfolio, though.

It's somewhere higher up, somewhere memos come from. Someplace monkeyboys used to come out to play, but somehow don't anymore.

I'm sure Ballmer will be able to figure out where the problem lies, eventually. Until then, look for a lot more senior Microsoft executives moving on to "other opportunities," possibly with Microsoft competitors.

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