MS Servers Chief Bob Muglia Is Latest To Get the Boot

Bob Muglia, president of Microsoft's Server & Tools Division, will step down this summer. "This is simply recognition that all businesses go through cycles and need new leadership in place," CEO Steve Ballmer wrote in an internal e-mail about the management change, published Monday on the company's web site.

Ballmer didn't mention any particular issues with the division, except to say that he and Muglia had "been talking about the overall business and what is needed to accelerate our growth." He added that he decided "nevertheless is the time to put new leadership in place."

Muglia, who joined Microsoft in 1988, helped found the server division, and has led the developer, Office and mobile-devices units, as then as parts of the Windows NT and online services businesses. He took over as head of servers and tools in fall 2005, and the division's revenue has increased more than half while his tenure.

The last two quarters

In the last two quarters, servers and tools showed a double-digit increase in sales, and revenue increased 4.8 percent in the fiscal year ending June 30, to $14.87 billion, along with an operating-profit increase of 14 percent. It's the third-largest division afterwards Windows and Office, and currently accounts for a quarter of Microsoft's total annual sales.

The division sells the company's Windows Server and SQL Server, development tools, the Azure cloud-computing platform, Windows embedded software, and the Windows operating system for corporate networks.

Ballmer's e-mail says the division is "uniquely then-positioned to drive the future of cloud computing," so some Microsoft watchers are speculating that he intends to find someone who can lead the division more in that direction. There are as well indications that there was disagreement on strategies. Ballmer noted that the two executives "have been talking about the overall business and what is needed to accelerate our growth."

The cloud as Google

Microsoft has increasingly been repositioning itself for the cloud as Google and other companies begin to use the Internet to deliver applications, virtual data centers, application development platforms, and more.

Muglia's departure is the latest in a series of executive changes at Microsoft as it tries to regain its footing in several innovation markets. Within the last two years, CFO Chris Liddell, Robbie Bach of the entertainment and devices division, Senior Vice President of Design and Development J Allard, Stephen Elop of the Office unit, and chief software architect Ray Ozzie have left.