May 18, 2007 8:29 AM PDT

Microsoft shifts server unit into business division

Microsoft on Friday said it is shifting its server and tools unit, currently grouped with desktop Windows and Microsoft's ad business, into the unit that houses Office and other business software.

The move includes the Windows Server unit, meaning that the server and desktop versions of Windows will be in separate divisions within the company, though the two share a common code base. The core operating system unit, which develops the underlying Windows technology, will remain in the existing platform unit under Kevin Johnson, Microsoft said.

The shift means that server and tools unit head Bob Muglia will report to Microsoft Business Division President Jeff Raikes. Microsoft also announced that as part of this shift, the company's developer unit will move under Muglia. Sanjay Parthasarathy will continue to direct the developer and platform evangelism effort.

In a statement, Microsoft said the realignment is designed to "sharpen leadership focus on the company's top priorities."

The move was announced internally earlier Friday by CEO Steve Ballmer, along with Raikes and Johnson. It comes as Microsoft is pouring more efforts into its advertising efforts, including plans to spend $6 billion to acquire ad firm Aquantive.

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