A Microsoft Veteran's Quantum Leap

As Bill Gates's ex-COO, Richard Belluzzo, takes the helm at Quantum, he sees aggressive innovation erasing storage giant's red ink

When Richard Belluzzo, 49, resigned as president and chief operating officer of Microsoft on May 1, 2002, after a companywide management reshuffle, he made it clear he wasn't done with corporate life. The 23-year veteran of computer maker Hewlett-Packard (HPQ ) and former CEO of computer systems maker Silicon Graphics (SGI ) announced he would be looking for a CEO job.

He didn't have to wait long. On Aug. 1, data-protection and network-storage systems maker Quantum (DSS ), claimed him as its new CEO. The company, which had $211 million in revenues in the first fiscal quarter of 2003, ended June 30, 2002, posted a net loss of $130.8 million for the period. On Aug. 8, Belluzzo spoke with BusinessWeek Online reporter Olga Kharif about his new job and his plans for Quantum. He also shared some of his thoughts on his former employer. Below are edited excerpts of the interview.

Q: Why did you choose Quantum?

A:

I was looking for a company that has a good history, a good culture, a good set of assets, a company that was of reasonable size and has a good potential to redefine the future. And in the area of data protection and network storage, Quantum has the opportunity to do that. So I am very excited about this job.

Q: But Quantum is in a down market. It's also projected to lose money through fiscal 2003.

A:

I believe that data storage is still a phenomenal place to be. The amount of information that needs to be stored continues to almost double every year. Financial institutions say they are not going to -- ever -- get rid of any data.

Storage, and data protection -- the markets we are in -- are areas that represent tremendous growth. Today, the whole data-storage industry is down. But I see this as an opportunity, because this is the time when you can make moves and make changes and make sure the company gets positioned well.

Q: What's your strategy for bringing Quantum to profitability?

A:

I can't fully explain the strategy yet because I don't start the job until Sept. 3. But we will make sure that we really strengthen our core franchise. In the data-protection area, we'll be very innovative, delivering products ranging from tape libraries to new backup storage solutions around network storage and protection. We will deliver new products in a very aggressive way.

The data protection and network storage area is a very fragmented market. There's no one who's emerged as the primary leader. So I do think we have the opportunity to grow and to really become a strong player.

Mobility, I believe, will be a major opportunity going forward. People will access the Internet -- will have more of their information available to them -- through mobile devices. All of this continues to speak to the idea that the amount of information to be stored will double every year, and Quantum's will be a good business.

We'll also continue to look for ways to save costs, so we can put all our money into these new business areas.

Q: You mentioned that you like the corporate culture at Quantum. How is Quantum's culture different from Microsoft's?

A:

The Quantum culture is more team-oriented. And I like working with a team. I think I do a good job of getting people to work together and make decisions and move things forward quickly.

Q: Microsoft's business has slowed down. What do you think will drive Microsoft's future growth?

A:

It's hard for me to talk about Microsoft now. In the past, I outlined a set of priorities, including rebuilding the core business, the Windows and Office group, and establishing some new areas of growth in the enterprise and mobility areas. There are plenty of opportunities for Microsoft to deliver growth. It's a question of deciding which ones to focus on, which ones are going to be the most significant.

Q: What's your sense as to which areas hold the most promise?

A:

I don't know if [my opinion] is relevant. But I said before, it would be enterprise business and some of these new devices, [such as the gaming stations]. The company may have different views on that now. I've not been very involved the past few months.

Q: At Microsoft, you were in charge of developing businesses, such as Xbox, which the company believes could offer high growth. Why do these businesses develop slower than expected?

A:

Certainly, the entire market has been slower. But Microsoft, in its typical fashion, will continue to be persistent in making improvements and building those businesses. These businesses will be important over time.

Q: Do you think Microsoft's management is steering the company in the right direction?

A:

I'll let other people be the judge of that.

Q: You tried to revamp Silicon Graphics before you joined Microsoft. But you left that company not having succeeded with a turnaround, say analysts. What have you learned from that experience that will help you in revamping Quantum?

A:

I learned a lot. It's difficult to grow your way out of difficult circumstances -- unless you push new product development, [as we plan to do at Quantum].

Edited by Patricia O'Connell