November 10, 1998 4:30 PM PST

Microsoft Net VP to step down

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Pete Higgins is stepping down from his post as vice president of the Interactive Media Group for Microsoft, the software giant confirmed today.

As previously reported by CNET News.com, sources said Higgins will not depart Microsoft, but

Pete Higgins
Pete Higgins
instead will take an "extended leave of absence." Until a permanent successor is named, Higgins, 40, will be replaced by Microsoft president Steve Ballmer.

Microsoft had scheduled a public announcement at 4 p.m. PT today, but changed its plans once word began to leak out. The company's rank-and-file were informed of Higgins's plans by email earlier today.

"I've been doing this pretty hard for 15 years, and it's never a good time, and it seems as good as any to take a break," Higgins said in an interview.

When asked what he plans to do with his free time, Higgins said, "I'm going to hang out with my kids, do a little travel, maybe go to golf school."

Higgins also plans to leave his hiatus period open-ended, adding that after six months he can "look up at that point and figure out what to do." Higgins reiterated that he was "committed" to returning to Microsoft.

Higgins's unexpected move comes as the software giant is creating an Internet portal, The software experience fusing all of its online properties into what Higgins has called "a single, very focused, very rich portal site." Microsoft faces intense competition, however, from both media companies and industry competitors, such as Netscape.

Higgins is the second top executive to recently leave the interactive division. As reported, Peter Neupert left Microsoft to run Internet start-up Drugstore.com. Neupert was vice president of news and publishing in Microsoft's interactive media group.

As head of the Interactive Media Group, Higgins has led Microsoft's online and interactive media business, which has included MSNBC, the Microsoft Network, multimedia games, consumer CD-ROM titles, hardware, and desktop finance applications.

Higgins joined Microsoft in 1983. Previously, he was a vice president of the company's applications and content group. Higgins also is a family friend of Microsoft chief executive Bill Gates.

For more than two years, Higgins has led Microsoft's foray into the interactive media business, with mixed results. Analysts credit Higgins with providing the vision behind Microsoft's Internet strategy, and for playing an instrumental role in transforming its myriad Web properties into an integrated network under the MSN moniker.

Despite the clout of Microsoft's brand name, MSN.com still is a long ways from having the reach of online giant America Online. Another interactive project, Microsoft's Sidewalk, has undergone a radical redesign as it experienced some cutbacks. Slate, Microsoft's online magazine, began charging for subscriptions earlier this year, but later than it originally had planned.

The interactive group has incurred about $1 billion in losses, according to analyst speculation, and Microsoft has yet to gain a significant share of those losses back.

"Microsoft invested across a range of strategies," said Bill Bass, an analyst at Forrester Research. "That is a strategy that only a Microsoft can pursue, because they have so much free cash flow."

In spite of the setbacks, however, Microsoft has managed to become a major Internet competitor in a relatively short period of time. At Microsoft's annual financial analysts meeting in July, Higgins said: "We've really established ourselves as a real player in a number of the largest and most successful categories."

In confirming Higgins's departure, a Microsoft spokesman said the executive has never taken more than a two-week vacation since he joined the company 15 years ago. "We're making great progress" in expanding revenues and controlling costs, he added, pointing to some recent advertising deals struck by Microsoft's interactive group as well as revenue forecasts ahead of projections.

In July, Microsoft appointed Ballmer, formerly executive vice president of sales and support and Gates's longtime business partner, as its president.

Higgins previously had reported directly to Gates. With July's management changes, he reports to Ballmer.

 

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