Microsoft's latest Windows Phone move: Changes at the top

Getting a read on how well Microsoft Windows Phone has been doing has been tricky in recent months, with each indication of momentum seemingly offset with one or more negative market share or news reports. But Microsoft CEO Steve Ballmer's memo sent within the company Monday and published publicly by Microsoft indicates Windows Phone 7 probably isn't living up to Microsoft's expectations.

Ballmer (see full memo below) announced this week that Andy Lees is being replaced as head of the Windows Phone Division by Terry Myerson, who led engineering efforts on Microsoft's latest bid to succeed on the mobile front. Lees is being moved to "a new role working for me [Ballmer] on a time-critical opportunity focused on driving maximum impact in 2012 with Windows Phone and Windows 8."

TECH ARGUMENT: iOS vs. Android vs. BlackBerry OS vs. Windows Phone

Windows Phone 7 was announced early last year and recent market share reports indicate the software has not caught on.

Gartner reported earlier this month that Microsoft grabbed just 1.5% share in Q3, with 1.7 million Windows phones being sold worldwide. ComScore's latest numbers also show Microsoft's share slipping in Q3.

Ballmer himself told financial analysts in September, "We haven't sold quite as many [Windows Phones] as I would have liked in the first year."

It's too early to say how Windows Phone 7.5 ("Mango"), which received generally good reviews, might impact market share as phones have only rolled out recently.

Microsoft is hopeful that its strong partnership with Nokia will boost Windows Phone sales outside the United States, although not all has been peachy for Microsoft abroad, with its plans for Windows Phone 7 becoming available in China recently bumped from late this year to the first half of 2012.

As for the touch-oriented Windows 8, part of Lees' new responsibilities according to the Ballmer letter, major challenges remain there, too, even though the product hasn't even rolled out yet. Forrester Research recently reported that interest in Windows 8 tablets is plummeting. Microsoft has said Windows 8 will not run on smartphones, leaving open the question of how future Windows Phone software will fit with Windows 8 and future Microsoft OS products.

Here's the full text of Ballmer's note to employees on the Windows Phone management change:

To: All Microsoft Employees From: Steve Ballmer Subj: Leadership Next Steps - Windows Phone Sent: Monday, December 12, 2011

We are driving toward the end of the year with a lot of momentum and buzz, especially in the consumer arena. The new Xbox dashboard is being well received, Kinect and Xbox consoles set a record for Black Friday weekend sales, the Windows Store news from last week delighted developers and partners, Windows Phone 7.5 continues to win reviews, and the Nokia Lumia series has grabbed a ton of attention in Europe, creating anticipation for availability in other geographies next year.

As I look at where we are, what we've done, and what we must do in the year ahead, I'm making two leadership changes to ensure we build on our momentum. First, I have asked Andy Lees to move to a new role working for me on a time-critical opportunity focused on driving maximum impact in 2012 with Windows Phone and Windows 8. We have tremendous potential with Windows Phone and Windows 8, and this move sets us up to really deliver against that potential.

Second, as Andy takes on these new challenges for the company, Terry Myerson will assume Andy's existing responsibilities for leading the Windows Phone Division. As many of you know, Terry played a key and highly successful role working with Andy by leading the engineering work on Windows Phone 7 and 7.5. Terry will now be responsible for Windows Phone development, marketing, and other business functions. Because Terry has been so integrally involved in our Windows Phone work already, I'm confident that he can make a seamless transition to this new and broader leadership responsibility.

Both these changes take place immediately.

I want to personally thank Andy for his contributions to the phone team. In the three years Andy has been leading the phone group, we've come a long way - we reset our strategy, built a strong team that delivered WP7 and WP7.5 and created critical new partnerships and ecosystem around Windows Phone. That is a ton of progress in a brief period of time, and I'm excited for Terry and team to keep driving forward and for Andy to dig into a new challenge.

It is amazing to pause and look back at what we've accomplished as a company this year, from our incredible product momentum to the formation of several powerful partnerships and the overall strength of our leadership team. And you know I'm a look-forward kind of person, so when I look forward to 2012, I see even more opportunity and potential in what we have planned.


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Tags Microsoftsmartphonesbusiness issueswirelessNetworkingoperating systemswindows phone 7softwareWindowscorporate issuespersonnelconsumer electronicsrestructuringsteve ballmerWindows 8Windows PhonesTerry MyersonAndy Lees

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