Microsoft confirmed Thursday that it has tapped former Yahoo executive Qi Lu to run its struggling Online Services Group.
Lu, formerly Yahoo's vice president of engineering for the Search and Advertising Technology Group, will take over as president of Microsoft's Online Services Group on Jan. 5, Microsoft said. Lu left Yahoo in August after 10 years at the company.
Lu will have his work cut out for him, as Microsoft has been struggling with its online business for some time. Growth of the OSG, which oversees Microsoft's search and advertising business, has been flat to slow for many years, despite the significant investment Microsoft has poured into the division.
Lu will report directly to Steve Ballmer. Lu worked at Yahoo since 1998 and led Yahoo through a revamp of its search platform and the introduction of the Panama ad platform.
At the same time, Brian McAndrews, the current SVP in charge of the Advertiser and Publisher Solutions Group is leaving Microsoft. McAndrews was the CEO of aQuantive when the company was acquired 19 months ago. McAndrews is considered a possibility for the open Yahoo CEO gig.
While Lu has managed large teams while at Yahoo (YHOO) and also huge projects, he does not have advertising sales and media experience that will be a big part of his purview at Microsoft.
In that job, he will be the boss of three strong digital execs at the software giant: Satya Nadella, the SVP who heads engineering for Microsofts search, portal and advertising platform group; Yusuf Mehdi, whose online services portfolio includes marketing, online audience business development and product management for MSN and the search properties; and Brian McAndrews, the SVP for the advertiser and publisher solutions group.
In picking a serious tech-oriented executive over a more media-centric one, a dichotomy that Ballmer has been puzzling over ... he is clearly staking out an even more head-on fight with Google (GOOG).
Between Microsoft's announcement today that it hired ex-Yahoo exec Qi Lu to lead its online business group, and Tuesday's news about a bunch of new Yahooesque Windows Live services, I can't stop thinking about that great Johnny Cash song, "One Piece at a Time."
It's about a guy who covets a Cadillac, so he builds one himself, with pieces lifted from the factory, one at a time, year after year. Eventually he gets his car on the cheap, although it's not quite what he expected.
Li's the biggest piece yet -- he's head of Yahoo's search and ad technology engineering -- but Microsoft's been steadily bringing big Yahoo technical types to Redmond over the years. Like Gary Flake, founder of Yahoo's advanced research labs, who came to Seattle in 2005 to start Microsoft's Live Labs.
The choice of Qi Lu to run Microsofts online services division offers the clearest picture yet about Steve Ballmers vision for the companys online effort. Its colors are blue, red, yellow and green and it is spelled G-O-O-G-L-E.
Mr. Lu was the top search engineer at Yahoo and is credited with helping build a very credible search engine. But he hasnt run a business or been a product manager. Why would Mr. Ballmer look at this scene and choose an engineer as the leader? Its not like Microsoft doesnt have engineering talent.
Heres one explanation: Mr. Ballmer sees Microsofts No. 1 enemy as Google. Googles No. 1 product is a search engine. So to beat Google at its own game, he may figure he needs the person who can make the best search engine possible. By that standard, Mr. Lu would be on anyones short list.
I'm starting to actually believe Steve Ballmer's insistence that he's not coming back around to pick up Yahoo at a reduced price. Why buy a company when you've snagged two of its top talents?