As anticipated, Microsoft CEO Steve Ballmer has announced a reorganization of the company. Actually, he called it a "far-reaching realignment," and the goal is to set the stage for faster innovation in a fast-changing world.
Ballmer is convinced this so-called realignment will help the company better execute its strategy to deliver a family of devices and services that "empower" consumers and enterprises alike.
"About a year ago, we embarked on a new strategy to realize our vision, opening the devices and services chapter for Microsoft. We made important strides -- launching Windows 8 and Surface, moving to continuous product cycles, bringing a consistent user interface to PCs, tablets, phones and Xbox -- but we have much more to do," Ballmer said.
"Going forward, our strategy will focus on creating a family of devices and services for individuals and businesses that empower people around the globe at home, at work and on the go, for the activities they value most."
Ballmer went on to say that improving performance has three big dimensions: focusing the whole company on a single strategy, improving capability in all disciplines and engineering/technology areas, and working together with more collaboration and agility around common goals.
"This is a big undertaking. It touches nearly every piece of what we do and how we work," Ballmer said. "It changes our org structure, the way we collaborate, how we allocate resources, how we best empower our engineers and how we market."
With that, Ballmer announced there will be four engineering areas: OS, Apps, Cloud, and Devices. Microsoft will keep Dynamics separate. The company will also increase focus on its engineering systems, processes, and tools to improve the productivity of every engineer and to facilitate engineering collaboration and contribution across the company.
Ballmer outlined a slew of executive shakeups, including the retirement of 20-year Microsoft veteran Kurt DelBene, who has been a big part of taking Office to the cloud. Finally, Ballmer discussed changes to the processes: each major initiative of the company -- product or high-value scenario -- will have a team that spans groups to ensure the company succeeds against its goals.
A Nimble Giant?
Rob Helm, an analyst at Directions on Microsoft, called the reorganization a positive move that could help Microsoft execute faster on the technology side of the business. But how it will ultimately pan out remains to be seen.
"The big picture is Microsoft is going from a company that had five to seven countries within the larger empire to a centralized organization. It's moving from a federal system to a centralized state where formerly you had leaders making both business and technology decisions for specific product lines," Helm explained.
"Now you'll have essentially one group calling the shots for the business and then technology leaders, these engineering groups that have been created, calling the shots on the technology side. Potentially, it could allow technology decisions to be made faster and open up more time and scope for cooperation between technology leaders."
As Helm sees it, Microsoft needs to move faster so customers can cope with new technologies moving into businesses now, like tablets and cloud services. He said Microsoft also needs to coordinate its own technologies so that they work together.
"There's no question the reorg addresses some key questions the company is facing," Helm said. "Microsoft needs to catch up in some markets, like tablets, and deal with competitors that have proven more nimble, like the cloud competitors that are chewing into its PC software and server software businesses."