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Microsoft reorg could fix some problems, create others

Juan Carlos Perez | July 12, 2013
Industry analysts are split on how effective Ballmer's reshaping of the company will be.

Meanwhile, the Cloud and Enterprise Engineering Group will be in charge of back-end technologies, including technologies for data centers, databases and enterprise IT systems and development tools. Its leader, Nadella, had been in charge of the Servers and Tools group, which had been performing well financially. A focus for this group will continue to be the company's Azure cloud platform.

The Dynamics enterprise software products will continue to operate separately under Kirill Tatarinov, but report to Lu, Chief Operating Officer Kevin Turner and Tami Reller, the other former Windows chief who will now head the Marketing Group. As part of the plan, Craig Mundie will work on a "special project" until the end of this calendar year, and assume a consultant role starting in 2014. Office chief Kurt Del Bene resigned from the company Wednesday, though his official last day will be Dec. 31.

Michael Osterman, from Osterman Research, views as positive the shift away from product-centric, siloed teams to a more unified approach that is focused on what customers need from devices and services.

"This is a good thing," he said. "They need to realign the company to be more responsive to customers."

The reorganization may yield a sharper marketing focus and strategy, an area where Microsoft has at times been weak, Osterman said.

Frank Gillett, a Forrester Research analyst, concurs. "This demonstrates a commitment to build an integrated, coherent Microsoft experience. It wasn't incoherent before, but it also wasn't well-coordinated," Gillett said.

What's not clear to Gillett is how exactly this will be carried out, and he foresees it being a major endeavor. "I'm not seeing an overall head of products. That concerns me," he said.

Others view the "One Microsoft" effort with skepticism, especially if it results in a doubling-down on what critics call the "Microsoft first" strategy, which they blame for Microsoft's reluctance, for example, to fully port Office to other operating systems like iOS and Android despite massive demand, in order to give Windows a competitive advantage.

"[One Microsoft] should do wonders for CIOs who are all in for Microsoft, but it should strike fear in the heart of CIOs who were hoping that Microsoft would decouple Office from Windows," Austin said.

Over the years, Microsoft critics have suggested the company's product lines are too diverse, and that certain businesses should be spun off as autonomous subsidiaries or even independent companies. Clearly, Ballmer has taken the opposite tack.

The implementation of the plan should take at least three months, maybe more, said Gillen, who considers this the company's biggest reorganization ever. Microsoft will need to continue tweaking the plan in the coming years based on market changes.


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