Following weeks of rumors, a massive shakeup of Microsoft's organizational structure, confirmed today, aims to deliver a better product experience to customers amid increasingly fierce competition from Google, Apple and other tech giants.
As part of the reorganization, which is being called "One Microsoft," the software company will consolidate departments to break up product silos, allowing senior executives to manage unified groups such as hardware, enterprise apps and more.
The attempt to revitalize the company comes on the heels of a report that PC sales, long a primary profit driver for Microsoft, have declined for the fifth consecutive quarter. The company is also struggling to keep up in mobile. Microsoft's share of smartphones in the U.S. was only 3 percent as of April 2013, according to research firm comScore.
"This is a big undertaking," said Steve Ballmer, Microsoft's chief executive, in a company-wide email about the reorganization. "It touches nearly every piece of what we do and how we work."
For instance, Terry Myerson will expand his previous role managing Windows for smartphones to overseeing the development of operating systems for every device, from PCs to mobile devices to the Xbox line of entertainment consoles.
Another major shift calls for Julie Larson-Green, formerly in charge of Windows engineering, to helm a new devices and studios engineering group, which will be responsible for developing all Microsoft hardware and entertainment products such as games, music and videos. Similarly, marketing and advertising will now be centralized rather than divided among product categories.
At least one high-level staffer, Kurt DelBene, the former head of Microsoft Office, is leaving the company.
The new strategy is an about-face for Microsoft, which has a long history of keeping products separate from one another, says Frank Gillett, an analyst at research firm Forrester. "They did a product Big Bang last year, which was Windows 8, and they're doing an organizational Big Bang this year."
One omission from Ballmer's memo, Gillett says, is a clear company hierarchy. Who will report to whom? It may be that Ballmer himself will take a more active role in coordinating between departments. Major company initiatives will cut across departments, Ballmer told employees, and each initiative will have a "champion" who will report either directly to him or to someone who reports to him. But that leaves a lot of fine print left to be written. Either way, says Gillett, the new design will require collaboration across teams.
For the time being, at least, investors and users have reason to feel positive about Ballmer's commitment to the company. "Microsoft is determined to change and improve," says Gillett. "You could sit there and let the future roll over you, but they're not doing that."