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‘One Microsoft’ under Ballmer: Microsoft announces restructuring plan

After months of rumours, Microsoft has officially announced a restructuring plan designed to reorganize the company into a leaner and more efficient device and services centric organization.


Microsoft published a memo to staff early Thursday morning announcing the details of its much-rumoured reorganization plan that would see the company anchored in devices and services. CEO Steve Ballmer wrote in the memo that the change will help the company unify around a single strategy so it can better tackle the market challenges and changes of the next decade.

“One Microsoft. We are rallying behind a single strategy as one company — not a collection of divisional strategies,” Ballmer wrote. “We will see our product line holistically, not as a set of islands.”

“All parts of the company will share and contribute to the success of core offerings, like Windows, Windows Phone, Xbox, Surface, Office 365, Bing, Skype, Dynamics, Azure and our servers,” he wrote. “The changes will enable us to execute even better on our strategy to deliver a family of devices and services that best empower people for the activities they value most and the enterprise extensions and services that are most valuable to business.”

The reorganization, however, was not as dramatic as some had speculated: it was merely a game of executive musical chairs. There won’t be a gulf between device and services lines, and everyone will still be reporting to Ballmer.

The biggest difference will be one that investors, not consumers notice. Every division within the company will have its own President and CFO. As reported previously, this will likely mean a different reporting regime of profit and losses insulating the company from its money loosing arms.The organization president will replace the individual unit president that currently exists, as multiple units will exist in each of the company’s organizations to encourage collaboration.

Same company, new titles

The official reorganization and change of titles is largely in line with what was reported prior to the announcement. Here are some highlights of the reorganization:

Julie Larson-Green will take the reins of the new Devices and Studios group which puts her in charge of every device Microsoft makes from Xbox to Surface. She’ll also have responsibility for the company’s TV and music offerings.

Qi Lu moves from the company’s online division to the new Applications and Services group. This puts Lu in charge of Microsoft’s apps, services, and search products. This means Lu will be in charge of everything from Bing to Office and Skype.

Satya Nadella has been put in charge of the new Cloud and Enterprise group. Given how important cloud computing will be in Microsoft’s new device and services centric organization, Nadella will have a lot on her plate.

Terry Myerson takes command of the new operating systems group. This means Myerson will be in charge of anything the Windows kernel touches, from Windows Phone to the OS powering the Xbox. Xbox Live also calls under his prerogative.

Tony Bates who was in charge of all things Skype now heads up Microsoft’s business development group. This puts Bates in charge of forming strategic partnerships as well as evangelism.

Kevin Turner remains Chief Operating Officer but Tami Reller takes over responsibility for centralized marketing, which was under Turner’s control.

But who’s number two?

What’s interesting about this reordering of Microsoft is that it’s truly one company under Ballmer. There is no heir apparent; no Biden like Vice President; no Riker to his Picard. From qualities of charisma to sheer experience there isn’t an apparent understudy to Ballmer like there was with Gates during his era.

Perhaps this is to quell dissent within the ranks, and stop an informal hierarchy from forming. No doubt his fumbles has cost him the confidence of his executives and managers, as last August’s Vanity Fair piece on his legacy of management demonstrated.

Or perhaps its because Ballmer knows that a reorganized Microsoft, ready to take on the challenges of the 2010s needs a chief visionary — without a distinct number two — more than a chief executive.

Regardless, it will be interesting to see what this reorganized company can do.

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