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Monday, June 19, 2006 - Page updated at 12:00 AM

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Brier Dudley

Microsoft will stay the course

Seattle Times staff columnist

It won't go over well with Mini-Microsoft and his pals, but the new leaders in Redmond have no intention of scaling down the world's largest software factory.

When I met with them Friday, the guys taking Bill Gates' place as the technology and strategy leaders of Microsoft acknowledged problems on the factory floor and recognized employee angst bubbling up in blogs like Mini's. But it's clear they also think the company has changed for the better, and they say it will reach an emotional and business turning point at the end of this year.

They also disagree with bloggers calling for radical changes, like layoffs or restructuring.

"The end of these long cycles creates some anxiety; it's just a long process," said Craig Mundie, the company's new chief research and strategy officer.

Get ready to see a lot more of Mundie. After 14 years in the innermost circle around Gates, Mundie's going to have a higher profile.

Gates recruited the supercomputer expert to expand Microsoft's business beyond the desktop PC. That effort has led to some hits, like Windows for small devices, and bombs, like the more recent Smartwatch. So Mundie has some perspective on Microsoft's strengths and weaknesses.

What about the flaws in Microsoft's development process revealed by the troubles finishing Windows Vista? The project bogged down so much that it had to be rebooted a while ago.

Mundie said the company made process improvements along the way, so there won't be as many problems the next time around.

"To some extent, many of the things that will make life better for those product people have already been done," he said, explaining that "we've done a lot of things that are now sort of slipstreamed into the process that will keep us from at least having to make those kind of stop-and-start-again decisions in some of these product groups across the company, not just in the Windows group."

Ray Ozzie, tapped as chief software architect, said it will be an "incremental" change, but he plans to apply his expertise in collaboration tools "to reduce coordination costs between cooperating groups" at Microsoft.

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The process changes may not have an immediately obvious effect, "but they'll begin to manifest as we get these major products shipped," Mundie said.

Then the factory will basically start up again, with better tools and a new emphasis on software and services running on the Internet.

As Mundie put it, "The end of this year is an emotionally important — and business-wise important — shift as we ship Exchange and Office 2007 and Windows."

When I asked Gates if any big changes are necessary, he said Chief Executive Steve Ballmer has already reorganized the business.

"Well, Steve organized the divisions and that's only nine months old, and we're all very excited about the leaders of those groups and the fact that creates some more autonomous decision-making," he said.

For the sake of Microsoft and Seattle's future as a hub of software development, I hope he and Mundie are right.

If they're wrong, and only spinning a positive story to tamp down the concerns of employees and investors, then it will be time for the Mini crowd to put down their keyboards, take up pitchforks and storm headquarters Building 34.

Brier Dudley blogs during the week at seattletimes.com/brierdudleysblog. Reach him at 206-515-5687 or bdudley@seattletimes.com.

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