Microsoft has announced a sweeping corporate reorganization that stems directly from its failure to deliver Windows Vista (formerly code-named Longhorn) in a timely manner. As part of the reorganization, Group Vice President Jim Allchin, who oversees all Windows development, will retire after Vista ships in late 2006. And former IBM Lotus Notes executive Ray Ozzie, who came to Microsoft when the software giant purchased Ozzie's latest company, Groove Networks, will move up to CTO.

What's most interesting about the reorganization is that the company's top leaders, CEO Steve Ballmer and Chairman and Chief Software Architect Bill Gates, will cede much of their day-to-day control of the company to underlings for the first time. Now, executives in charge of business groups will have direct responsibility for products, letting the company move products to market more quickly. In the face of fast-moving competitors such as Google and Steve Jobs' rejuvenated Apple Computer, Microsoft has hardly seemed like the nimble company of old.

"These changes are designed to align our Business Groups in a way that will enhance decision-making and speed of execution, as well as help us continue to deliver the types of products and services our customers want most," Ballmer said. "We see a new era of opportunity to provide greater value to our customers by weaving both software and services into forms that suit their needs."

Much is changing under the new organizational chart at Microsoft. In the year before Allchin retires, both Allchin and Kevin Johnson will be copresidents of the Microsoft Platform Products & Services Division; Johnson will inherit the division after Allchin leaves. Xbox head honcho Robbie Bach is now the president of Microsoft's Entertainment & Devices Division, which oversees the Xbox as well as the company's other hardware products.

The biggest change, of course, is Allchin's retirement. A dedicated Microsoft cheerleader and a proponent of protecting the company's Windows investment, Allchin is a divisive figure at Microsoft. He is arguably personally responsible for the dominance of Windows and jealously guards the OS as Microsoft's crown jewels. But after Allchin won an internal struggle regarding product bundling in Windows 95, the company was found to have violated federal antitrust laws. Much of that blame rests squarely on Allchin's shoulders, critics say, and Allchin's poor performance at the company's US antitrust trial further damaged Microsoft's credibility. Under Allchin, successive versions of Windows, including Windows 2000, Windows Server 2003, and Longhorn (both Vista and Longhorn Server) have taken far longer to come to market than originally planned, and many far-reaching technologies such as those proposed in project Cairo in the mid-1990s have yet to materialize.

For its part, Microsoft is standing up for Allchin, as it should. "I speak for the entire Microsoft family when I say how proud and appreciative we are of Jim's immeasurable impact on our success as a company," Ballmer said. "Jim is a key visionary and design architect who will help continue to lead us in the coming year."

In my opinion, Allchin deserves praise for his obvious dedication to Windows and for turning the OS into something of which a technologist can be proud. He's clearly a good guy, and it's obvious in retrospect that his befuddled appearance during the Microsoft antitrust trial was as scripted by the company's lawyers as were Gates's and Ballmer's lackadaisical antitrust deposition appearances. One might wonder whether his successor has the technical chops to really replace Allchin. My guess is that few people at the company could fill that role effectively.

As for the wider reorganization, Microsoft has a lot of baggage, history, and problems to overcome. In the 20 years since Gates announced that he had no intention of turning his company into the next IBM, Microsoft has become, well, the next IBM, with multiple layers of executives who seem to be more interested in protecting their pet projects than in promoting good technology. I've opined in the past that the only good products that have come out of Microsoft in the past few years have come from small groups working outside the system. Until the software giant truly recognizes this problem and moves to fix it, I suspect that things won't really change.