Ballmer Outlines Microsoft’s Big Restructuring

News came out earlier this week that Microsoft would announce a restructuring plan on Thursday. Well, it’s Thursday, and the announcement has just come out. CEO Steve Ballmer said in an email to...
Ballmer Outlines Microsoft’s Big Restructuring
Written by Chris Crum
  • News came out earlier this week that Microsoft would announce a restructuring plan on Thursday. Well, it’s Thursday, and the announcement has just come out.

    CEO Steve Ballmer said in an email to Microsoft employees that the company has released to the public, “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.”

    “We will do this by leveraging our strengths,” he added. “We have powered devices for many years through Windows PCs and Xbox. We have delivered high-value experiences through Office and other apps. And, we have enabled enterprise value through products like Windows Server and Exchange. The form of delivery shifts to a broader set of devices and services versus packaged software. The frontier of high-value scenarios we enable will march outward, but we have strengths and proven capabilities on which we will draw.”

    A major theme of the letter is that the company is rallying behind “one strategy” and “one Microsoft,” as opposed to “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,” said Ballmer. “We will see our product line holistically, not as a set of islands. We will allocate resources and build devices and services that provide compelling, integrated experiences across the many screens in our lives, with maximum return to shareholders. 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.”

    The company is being organized by function: Engineering (supply chain and datacenters), Marketing, Business Development and Evangelism, Advanced Strategy and Research, Finance, HR, Legal, and COO (including field, support, commercial operations and IT). There will be four engineering areas: OS, Apps, Cloud, and Devices. Dynamics will be kept separate because it needs special focus, Ballmer said.

    “We will consolidate our technologies coherently into these groups pulling together some things that have been spread out in our current BG structure like cloud infrastructure, operating systems, mail, and identity, to name a few,” said Ballmer. “Some of these changes will involve putting things together and others will involve repartitioning the work, but in all instances we will be more coherent for our users and developers.”

    The Operating Systems Engineering Group will be led by Terry Myerson, and will span all of Microsoft’s OS work for console, mobile device, PCs and back-end systems. The core cloud services for the operating system will be in this group.

    The Devices and Studios Engineering Group will be led by Julie Larson-Green, and will have all hardware development and supply chain components. Larson-Green will take responsibility for all games, music, video and other entertainment offerings.

    The Applications and Services Engineering Group will be led by Qi Lu, and will include broad applications and services core technologies in productivity, communication, search and other information categories.

    The Cloud and Enterprise Engineering Group will be led by Satya Nadella, who will lead datacenter development, construction and operation.

    Dynamics will continue to be led by Kirill Tatarinov, and run as is, but product leaders will report to Qi Li, and marketing leader will report to Tami Reller. His sales leader will report to the COO group.

    The Advanced Strategy and Research Group will be led by Eric Rudder.

    The Marketing Group will be led by Tami Reller, and will lead all marketing with the field relationship as is. Mark Penn will lead with Tami on the newly centralized advertising and media functions.

    Kevin Turner will continue to lead worldwide slaes, field marketing, services, support, and stores, as well as IT, licensing and commercial operations as COO.

    The Business Development and Evangelism Group will be lead by Tony Bates, who will focus on partnerships (OEMs, silicon vendors, key developers,Yahoo, Nokia, etc.), and evangelism/developer outreach. DPE, Corporate Strategy and the business development efforts formerly in the BGs will become part of this new group. OEM will remain in SMSG with Kevin Turner, who wil report to Bates, who will work closely with Nick Parker on key OEM relationships.

    The Finance Group will be led by Amy Hood, and will centralize all product group finance organizations. Legal and Group Corporate Affairs will continue to be led by General Counsel Brad Smith, and Lisa Brummel will lead Human Resources.

    Kurt DelBene will be retiring from Microsoft after over 20 years. Graig Mundie will be working on a special project for Ballmer through the end of the year, and next year will continue as a consultant before departing at the end of 2014.

    Rick Rashid is stepping away from running Microsoft Research, and will be in a new role in the Operating Systems group.

    Ballmer says that the keys to making all of this work are for the company to be: nimble, communicative, collaborative, decisive and motivated.

    You can read Ballmer’s letter in its entirety here.

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