Microsoft Announces Sweeping Reorg

Microsoft Announces Sweeping Reorg

Ch-ch-changes at Microsoft

As expected, Microsoft on Thursday announced a sweeping reorganization of its business units, consolidating a fairly complex corporate structure into just three major business groups that mimic its new direction as a supplier of devices and services. So, we knew this was coming, but who were the winners and losers in Microsoft’s executive ranks?

“Today, we are announcing a far-reaching realignment of the company that will enable us to innovate with greater speed, efficiency, and capability in a fast-changing world,” Microsoft CEO Steve Ballmer wrote in a letter to employees. “Today’s announcement 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.”

Related: "Ex-Windows Chief Gets $14 Million Golden Parachute"

Under its new corporate structure, Microsoft now consists of four main engineering groups: OS, Devices and Studios, Applications and Services, and Cloud and Enterprise, plus a separate Dynamics group that requires “special focus.” These break down as follows:

OS Engineering Group. Led by Terry Myerson, this group will span all of Microsoft’s OS work for consoles, mobile devices, PCs, and back-end systems. The core cloud services for the OS will be in this group.

Devices and Studios Engineering Group. Led by Julie Larson-Green, this group will be responsible for all hardware development as well as all games, music, video, and other entertainment.

Applications and Services Engineering Group. Qi Lu will lead this group, focusing on broad applications and core technologies in productivity, communication, search, and other information categories.

Cloud and Enterprise Engineering Group. Led by Satya Nadella, this group will focus on back-end technologies like data center, database, and various solutions for enterprise IT and development tools.

Additionally, Eric Rudder will lead a new Advanced Strategy and Research Group, Tami Reller will lead all marketing, Kevin Turner will continue as COO, Skype’s Tony Bates will focus on key partnerships, and Amy Hood will centralize all product group finance organizations.

Some of these choices are excellent. Satya Nadella is a seasoned and intelligent leader, and Tami Reller (previously the CMO and CFO of Windows) will oversee Microsoft marketing. But at least two of these choices are, well, interesting. Julie Larson-Green (who previously tag-teamed leadership of the Windows division with Tami Reller) will oversee all device engineering, putting her in charge of Surface and Xbox. And Terry Myerson, amazingly, will take over a combined Windows and Windows Phone engineering group.

The big losers? Bumped aside in Office’s move to Applications and Services, Kurt DelBene is retiring. Craig Mundie is stepping down to work on “special projects” for Mr. Ballmer through the end of 2013 and then will consult privately with Microsoft. And Kevin Turner has lost control of marketing.

But Microsoft says the new organization will allow it to be more nimble, collaborative, decisive, and motivated. These are all strong buzzwords. But we’ll need to wait and see whether this change results in any real-world changes to how Microsoft performs and reacts to the markets in which it competes.

“Together, we have created great products and great success, but we all want more,” Mr. Ballmer wrote. “That means a strategy to deliver a family of devices and services that best enable people for the activities they value most and the enterprise extensions and services that are most valuable to business. A new structure to bring these to market faster.”

Related: "Don Mattrick Exits Microsoft Ahead of Massive Reorg"

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