Vamos selection a "natural progression of events"

Microsoft's decision to remove Paul Houghton from the Australian managing director's position and replace him with current ninemsn boss Steve Vamos has been described by industry analysts as an unsurprising turn in a natural chain of events.

Microsoft announced earlier in November that it had appointed Steve Vamos to the position, effective from 1 February 2003. Current MD Paul Houghton, who has held the position for the past three years, will be transferred back to the US office to take up the position as vice president, US South Region.

According to TMP Executive Search president Dan Dumitrescu, Houghton's removal from the position was a "natural progression of things".

"It's not an accident that he has been moved on - the move was well planned," he said.

Large corporations such as Microsoft or IBM pay an enormous amount of attention to lining up potential candidates within the company for promotions, and have strong track records of good succession planning, which extends over two or three years and includes two or three up-and-coming candidates.

"If you look at former appointments to this position, Microsoft has normally promoted within or moved staff. It's a global company, and this is a way to fast track talent and expose it to different positions," Dumitrescu said.

Vamos is not an unknown quantity to Microsoft, and is practically an internal candidate for the job (due to his role at ninemsn), he said.

Dumitrescu said he expects Houghton was on a fixed contract, which had expired.

Yet according to a human resources spokesperson at Microsoft Australia, full-time employees, including MDs, are not employed on fixed-term contracts.

"This is an important point as they are hired for an indefinite period. This means that their performance will determine their continued employment with us, including their promotion opportunities," the human resources person stated.

Dumitrescu said normal performance indicators for someone such as the MD of Microsoft Australia would ultimately revolve around financials.

"The bottom line is growth and expansion," he said.

His comments are interesting, given the recent concerns about the longevity of the software giant's contract with one of its larger Australian contract holders -- Telstra -- and the recent visit to Australian shores by Microsoft CEO Steve Ballmer.

Speculation that Telstra was looking at re-evaluating its contract with Microsoft began in July, when the telco announced it would implement Sun's application platform as well as Microsoft's .NET in a bid to develop online customer applications for its customers across all of its communications platforms.

Dumitrescu said the US management team's decision on a replacement for Houghton would also be driven by the company's intentions of entering the enterprise software space.

Daniel McHugh, Gartner research analyst, IT trends in Asia Pacific, said the choice of Vamos for the position is more about Microsoft pushing new services and concentrating on the role its subsidiaries play.

While the decision to move Houghton back to the US was "unsurprising", it will be interesting to see how Vamos's appointment will affect the relationship between Microsoft and ninemsn, he said.

"With Microsoft offering services such as Xbox Live and ninemsn 8 globally, the company requires tight ISP services and an online presence," he said.

Choosing Vamos could be a way of bringing these services closer together.

McHugh said Microsoft's MD position was a unique one in the marketplace, given the company's exposure to consumers, and easy accessibility to the IT community.

"The Microsoft MD is a public spokesman - more so than MDs in standard vendor or enterprises," he said.

He added Australia was a testing ground for many Microsoft initiatives and, as such, the role of managing director was also a good way to test company executives.

Dumitrescu says he approved Microsoft's decision to appoint Steve Vamos to the Australian helm, referring to him as a "brilliant" candidate for the job.

"Microsoft has a significant role in shaping technology in the US. It should be the same here. They should be visible. Steve has a good track record of corporate Australia… he will make Microsoft a good corporate citizen," he said.

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