Microsoft confirms massive reorganisation, focuses on “devices and services”

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Microsoft Makes Major Announcement In Los Angeles

Microsoft has today confirmed the much-rumoured massive reorganisation of the company that will transform the company into a “devices and services” company. In an internal email to Microsoft employees by Steve Ballmer, the restructure will see Microsoft have one single strategy.

Divisions will now be based by function as opposed by product. This pretty much eliminates many units within the company and forces more collaboration across divisions on products (for instance – Xbox software and Xbox hardware/entertainment are now in different divisions)

As Ballmer outlined in his internal email, the new divisions are: Engineering (which includes the supply chains and data centres), Marketing, Business Development and Evangelism, Advanced Strategy and Research, Finance, HR, Legal and COO.

However, Engineering will be subdivided into four key areas: Operating Systems, comprising of Windows, Windows Phone and the Xbox software; Devices and Studios, the new home of Xbox hardware, Surface and entertainment services; Applications and Services, which take control of Office, Skype and Bing; and Cloud and Enterprise Engineering, likely be the home of Azure and its enterprise IT solutions and development tools.

Dynamics, its business solutions arm, will remain separate due to its “special focus”. However, leaders will “dotted line” report to other people in the company because of the centralised nature of marketing, sales and products.

“We are rallying behind a single strategy as one company — not a collection of divisional strategies. Although we will deliver multiple devices and services to execute and monetize the strategy, the single core strategy will drive us to set shared goals for everything we do. We will see our product line holistically, not as a set of islands,” Baller wrote in a memo.

“All parts of the company will share and contribute to the success of core offerings, like Windows, Windows Phone, Xbox, Surface, Office 365 and our EA offer, Bing, Skype, Dynamics, Azure and our servers. All parts of the company will contribute to activating high-value experiences for our customers.”

Executives have been moved across to new roles. Terry Myerson, in charge of WIndows Phone, will now become the head of its OS Engineering division; while Julie Larson-Green, co-head of Windows, will become in charge of the its Devices and Studios. Online Services chief Qi Lu moves to Applications and Services, and Servers and Tools head Satya Nadella becomes in charge of Cloud and Enterprise.

Other executives on the move include Skype’s President Tony Bates, who will become in charge of Business Development and Evangelism – focusing on business development, corporate strategy and managing its relations with key partners Yahoo and Nokia. It will also assist in getting developers to build products for Windows (and Windows Phone).

Tami Reller, who was another co-head of Windows, moves to take control of all marketing with Mark Penn (marketing strategy head); while Eric Ruddler, CTO, will now head up the Advanced Strategy and Research Group. Office head Kurt DelBene is leaving the company, deciding to retire after 20+ years with the company; while senior advisor Craig Mundie is moving to work on a new project for Ballmer.

Ballmer is focusing more on “unity” and “collaboration” in the reorganisation, but as AllThingsD’s Kara Swisher has noted, it has given more control to Ballmer himself. “[He has not] answered the increasingly interesting question of who will eventually replace him. The new reorg does not seem to point to any one person as a clear heir apparent.”

Yet, that is.”