[This story is running in the print edition of The Seattle Times July 12, 2013.]
When CEO Steve Ballmer announced Microsoft’s most sweeping reorganization in years Thursday, he said it was to make the company faster-paced and more collaborative — all the better to advance his vision of turning the software giant into a devices-and-services company.
That’s what makes the restructuring so crucial: The future of the company, and how well it competes in a changing tech market, hangs at least in part on how well this reorganization is executed.
Ballmer has realigned the company according to function, cutting in half the number of product divisions and centralizing operational services.
Previous divisions such as Windows and Windows Phone, or Office and Bing, have been collapsed into the larger engineering units.
Operational services such as marketing, finance and business development will now all go through a central companywide leader of those functions, rather than through each product division.
There are no plans for layoffs, Ballmer said during a call with reporters and analysts. But he did say there would be many changes in people’s job duties.
The reorganization attempts to address some of the shortcomings that have led a scrambling Microsoft to play catch-up in the smartphone, tablet and search markets as competitors, including Google and Apple, soared with their offerings.
This massive realignment is part of Microsoft’s strategy for the future — one in which desktop and notebook PCs and in-house servers on which Microsoft built its empire are increasingly overtaken by mobile devices and cloud services.
“We see this as being a really significant move for Microsoft,” said Al Gillen, analyst with research firm IDC. “It opens the door for them to make more aggressive moves to compete in the new world of computing.”
Microsoft recognizes that in this new world, it has to provide a more coherent, cohesive message to users about why to choose its offerings and to developers about why to build for and on Microsoft platforms.
“This is a change that Microsoft is putting in place to set them up for the next five years, not for the next few months,” Gillen said.
[Continue reading the story here.]