Turf War Blamed for Boss Quitting

Microsoft president and chief operating officer Rick Belluzzo, the third most powerful figure at the software group, has quit suddenly after little more than a year in the job.

His departure comes amid a broad restructuring of the company that would have stripped Mr Belluzzo of much of his responsibilities. Many of his day to day duties will revert to chief executive Steve Ballmer. The departure was described by some analysts as the result of a turf war between the two. They added that the resignation also underlines the difficulty of working alongside the larger than life personalities of Mr Ballmer and chairman Bill Gates.

Mr Belluzzo's hiring, 2 years ago from the top job at Silicon Graphics, was hailed as a coup for Microsoft. Many viewed the appointment as an attempt to soften the image of the company as it faced the US government's antitrust case.

Mr Belluzzo, 48, was widely credited with engineering a turnaround at Microsoft's internet business MSN, which under his leadership added millions of new subscribers and climbed to number two in the market behind America Online. He was also closely involved in the launch of the Xbox video games console.

He will stand down at the beginning of next month but will continue to work at Microsoft until September.

Mr Belluzzo said he had taken an active part in drawing up the restructuring plans at Microsoft and became aware in January that they would make his own job redundant. "Microsoft has to change the way it is managed," he said. "Given where Steve and I knew we needed to take the business, I decided it was the right time to pursue my goal of leading my own company," he said.

He played down any prospects he may have had in the succession plans at Microsoft. "I think Bill and Steve will be around for some time. So I never thought that was my ambition here." He does not have a job lined up.

The shake-up at Microsoft has been designed to reflect the increasingly sprawling nature of the company and will give greater responsibility to its seven different business divisions. Each division will report directly to Mr Ballmer. Mr Belluzzo will not be replaced.

"I think Rick bumped heads and lost," said Rob Enderle of Giga Information Group. "The way they've redesigned the firm, much of what Rick would have wanted is now gone. They gave him a fun job and then took away the fun stuff."

George Gilbert, technology analyst at Credit Suisse First Boston said it appeared that Mr Ballmer had been reluctant to give up the reins of the company. "Belluzzo was widely credited with energising the MSN group and it was assumed his promotion would allow Ballmer to focus less on day to day issues," he said. "But, based on reporting lines, it appears Ballmer had just as much responsibility as ever."

In a statement released on Wednesday night, Mr Ballmer and Mr Gates heaped praise on Mr Belluzzo.

"Rick has made important contributions throughout his tenure here at Microsoft," Mr Gates said.

Merrill Lynch said the changes at Microsoft would have only "minimal impact" on the company.