MICROSOFT'S CEO STEVE Ballmer has named former Silicon Graphics head Rick Belluzzo as president and COO, replacing COO Bob Herbold.

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Belluzzo, 47, joined Microsoft in 1999, serving as vice president of the personal services and devices group and the company's consumer group. In this position, he oversaw operations of the Microsoft's MSN.com Web site, a job an analyst said may have given him the necessary experience to oversee Microsoft's transition to its .NET business strategy.

"Microsoft is in the middle of changing its business model from a product orientation to a service orientation," said Chris Le Tocq, an analyst at market research firm Gartner. "Belluzzo's success with MSN and the other Internet services will help."

Le Tocq praised Belluzzo's management track. Prior to his stint at Silicon Graphics, he served as executive vice president of Hewlett-Packard, overseeing the printer business.

In his new role, Belluzzo will lead Microsoft's business strategy and direct business operations, sales, marketing, and business development as well as Microsoft's non-PC businesses, the company said.

What surprised Le Tocq was Ballmer's decision to step aside as president. "Steve's not having his finger in every pie is unusual," Le Tocq said. "If you look at someone that works at Oracle, you'll see a little bit of Larry [Ellison] there, and someone at Microsoft will have a little bit of [Bill] Gates and Ballmer there. Those are big shoes to fill for Belluzzo."

Herbold, after 6.5 years at Microsoft and 26 years at Procter & Gamble, is retiring. He will stay on part-time as a liaison to industry, government, and customers.