Microsoft reorganises to speed development and improve collaboration

Software giant, playing catch-up in mobile computing, cuts number of units and shuffles senior management roles

Microsoft chief executive Steve Ballmer, who announced a radical restructuring of the business.  Photograph: REUTERS/Robert Galbraith

Microsoft chief executive Steve Ballmer, who announced a radical restructuring of the business. Photograph: REUTERS/Robert Galbraith


Microsoft is breaking up its fiefdoms as it seeks to create better products, faster. The company said Thursday that it would dissolve its eight existing product divisions in favour of four new ones arranged around broader themes, a change it believes will encourage greater collaboration.

Steven Ballmer, Microsoft's longtime chief executive, will shuffle the responsibilities of nearly every senior member of his executive bench as a result.

The shake-up is an effort by Microsoft to reduce the rivalries that have built up over time among its previous divisions, which sometimes resulted in needless duplication of effort.

Each one of the old divisions had its own finance and marketing organisations, and in the revamping, Microsoft is centralising those functions.

The new divisions are meant to effectively force its groups to work more closely together to create complete products consisting of hardware, software and services.

It is not clear, though, that simply revamping the company's structure will enable Microsoft to create products that are more timely and resonate more with customers. Microsoft has been widely criticised for being late with compelling products in two lucrative categories, smartphones and tablets.

For the last year, Mr Ballmer has talked increasingly about transforming Microsoft into a "devices and services" company, a sign that the company needs to evolve from its roots as a pure software company to pay more attention to all the ingredients that make modern devices appealing. That is one area where a Microsoft rival, Apple, has excelled.

While the company is emphasising hardware more prominently in its new organisation, Microsoft does not, for the time being, appear to be abandoning its strategy of working with outside manufacturers of personal computers and mobile phones.

Among the top executives named to new roles is Julie Larson-Green, who had overseen the development of the Windows operating system, will lead a new devices and studio group that consists of Xbox hardware, the Surface family of tablet computers, hardware accessories and games.

Microsoft will consolidate all its major operating systems, including Windows, Windows Phone and the software that powers the Xbox, under Terry Myerson, who handled engineering for only Windows Phone before.

Qi Lu, the head of Bing and Microsoft's other Internet initiatives, will take over a new applications group and oversee the company's lucrative Office franchise and Skype.

Satya Nadella, as the head of the new cloud and enterprise group, will manage the network of data centers that power all of Microsoft's online services, in addition to Windows Azure, the cloud service he has been running for some time.

In addition to changes to its product groups, Tony Bates, the former president of the Skype division, will be in charge of business development and relations with developers, along with mergers and acquisitions. – Copyright The New York Times Limited 2013