Microsoft leaders announced its biggest overhaul in five years to improve its innovation and streamline its product line as it plays catch up with competitors in mobile and cloud computing efforts.
The company will reorganize itself into four engineering groups, reorganize executive positions, and realign its product teams as it struggles to unify itself across an unwieldy diverse product offering. The $74 billion company with over 98,000 employees seeks to accelerate product development to increase the appeal of its smartphone and tablet offerings as it struggles to adapt to a post-PC world. Empowered by desktop sales for over three decades, the company’s revenues have faltered as the world embraces tablets and other mobile devices. PC shipments declined 11.4 percent globally in the second quarter, the fifth consecutive quarter of year-on-year decline, according to industry research firm IDC.
“As devices proliferate, it has become clearer that consumers crave one experience across all of their technology,” Microsoft CEO’s Steve Ballmer wrote in a lengthy memo titled “One Microsoft.” “…As technology moves from people’s desks to everywhere in their lives, it should become simpler, not more complex. And our products and services should operate as one experience across every device. …We realized we could bring those strengths together in a unique, differentiated experience that will delight consumers and customers. …In the end, we realized our strengths are in high-value activities, powering devices and enterprise services. 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.”
Certain to set the tone for the rest of Ballmer’s tenure, the moves are seen by some analysts as a way to consolidate an encumbered organization struggling with too many competing heads and department infighting.
“You don’t do a major reorganization like this unless you have some serious problems,” BGC analyst Colin Gillis told Reuters. “It consolidates power around the CEO.”
Ballmer announced four new engineering leaders and their prospective groups, including:
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Terry Myerson, currently the Windows Phone chief, will serve as executive vice president for operating system engineering, including Windows, Windows Phone and the Xbox operating system.
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Satya Nadella, formerly the president of Microsoft’s Server & Tools group, will serve as EVP for cloud and enterprise engineering. This will include his previous product groups as well as Windows Embedded and Global Foundation Services, Microsoft’s network of data centers
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Julie Larson-Green, formerly the head of Windows engineering, will become the executive vice president of devices and studio engineering, which includes the Microsoft Surface tablet, the Xbox hardware and mice and keyboards.
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Qi Lu, formerly president of the Online Services Division, will serve as executive vice president of apps and services engineering, including current Bing product teams, the vast majority of Microsoft Office, Skype, the Lync communications service as well as the Yammer business social network.
No job cuts have been announced with the overhaul in the short term.