Meet Microsoft's New Net Navigator

Can ex-SGI chief Belluzzo steer it to dominance on the Web?

Microsoft Corp. has long sought two elusive quarries: a coherent strategy for its diffuse Internet businesses and a high-powered executive to implement it. Now, the software giant is bagging one of them: In early September, Microsoft will name Richard E. Belluzzo as its new Internet czar, company insiders confirm.

It's hardly an obvious match. Belluzzo, who oversaw Hewlett-Packard Co.'s printer business before becoming CEO of Silicon Graphics Inc., is a hardware guy with a flair for finance, not building businesses in cyberspace. "It's kind of disappointing," says a top analyst who covers Microsoft. "Microsoft needs someone who grew up on the Net. Don't you think they should have been able to find someone like that?"

In fact, the company spent months wooing others, including former Microsoft bigwig Brad Silverberg and former Walt Disney Co. cyber-czar Jake Winebaum. It even considered a bid for Excite@Home that would have let it put its president, George Bell, in charge of some Microsoft Internet properties.

Belluzzo, who vainly struggled to reverse Silicon Graphics' slide before resigning abruptly on Aug. 23, would be taking on one of the most difficult management assignments on the Net. Despite years of effort and unparalleled resources, Microsoft is not a force on the Net, though it's a major supplier of Net software. The company got into the online fray as a would-be challenger to America Online Inc., then turned its Microsoft Network into an Internet access service. It also jumped into content with MSNBC and what has now become an array of unrelated Web sites.

Belluzzo--who declined to confirm his new job--will be in charge of untangling and refocusing those properties. Company execs say the general drift of an emerging strategy is to focus mainly on making MSN a Web platform. Like Windows, it would be the foundation on which others would build their applications. The difference is that the applications would be Web sites or E-commerce services.

To pursue that strategy, however, Microsoft has to figure out what to do with its content areas. Travel site,,, and real estate site all compete with what Microsoft hopes will be its MSN customers. For months, debates have raged inside the company about what to do with its content and media assets. Options include spinning them off separately or as a group, perhaps with Belluzzo as chief. Or Microsoft may keep them inside but give them more autonomy. A tracking stock for the properties, once considered likely, has been all but ruled out.

In any role, Belluzzo, 45, would beef up Microsoft management. It has lost key execs to retirement or startups, and an insider says Gates is concerned whether his team can handle Microsoft's growth. "The only guy at Microsoft who has ever run an operation the size of Microsoft will be Rick Belluzzo," says the insider. "Bringing in some new blood is a great idea," says Morgan Stanley Dean Witter analyst Mary G. Meeker.

OLD PALS. Belluzzo is already well-known in Redmond. A proponent of Windows while at HP and SGI, Belluzzo is friendly with President Steven A. Ballmer and Gates. He is also a protege of former HP executive and Microsoft Director Richard A. Hackborn.

Microsoft may be just the place for Belluzzo to shine. At HP, he left after CEO Lewis E. Platt refused to adopt his aggressive plan to focus on new businesses, including the Net. He ran the show at SGI but wearied of the slow progress of SGI's turnaround. "It's very hard to do a turnaround amid all the gold-rush fever out there," he says. "That was frustrating."

At Microsoft, Belluzzo--who will get up to 2 million shares of Microsoft stock--would still be trying to forge a turnaround. But he'd have vast resources, including access to Microsoft's $17.2 billion cash kitty and a boss who's determined to succeed. "We're in a new Information Age, and it's time I become a part of that," says Belluzzo. Ditto for Microsoft.

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