Microsoft undergoes massive reorganization

Ballmer shuffles department heads and launches new business model to create "one Microsoft"

Get ready for a brand new Microsoft, as the company is about to undergo some massive restructuring and refocusing.

The company is reorganizing into fewer units, and will be moving around some senior management roles, in order to speed up the development of new business model, focusing on hardware and Web-based services, the company announced Thursday. 

Starting now, the company will be shifting to "a broader set of devices and services versus packaged software," Microsoft CEO Steve Ballmer wrote in an internal email to employees, entitled "One Microsoft." 

"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 wrote.

"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."

In order to put this strategy into place, the company will be organized into different functions: engineering, marketing, business development and evangelism, advanced strategy and research, finance, HR, legal, and COO.

There will also be four engineering areas: OS, Apps, Cloud, and Devices.  Dynamics, Ballmer noted, will be kept separate "as it continues to need special focus and represents significant opportunity."

Here is who will be running all 12 of these groups:

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

• Devices and Studios Engineering Group will be led by Julie Larson-Green. This group encompasses all hardware development and supply chain from the smallest to the largest devices that Microsoft builds. Julie will also take responsibility for the company's studios experiences, including all games, music, video and other entertainment.

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

• Cloud and Enterprise Engineering Group will be led Satya Nadella, who will lead development of MIcrosoft's back-end technologies like datacenter, database and our specific technologies for enterprise IT scenarios and development tools. He will lead datacenter development, construction and operation.

• Dynamics will be led by Kirill Tatarinov, who will continue to run Dynamics as is, but his product leaders will dotted line report to Qi Lu, his marketing leader will dotted line report to Tami Reller and his sales leader will dotted line report to the COO group.

• Advanced Strategy and Research Group is to be be led by Eric Rudder, and the group will lead the Research and Trustworthy Computing teams, who are focused on the intersection of technology and policy, and will drive the company's cross-company looks at key new technology trends.

• Marketing Group will be led by Tami Reller will lead all marketing with the field relationship as is today. Mark Penn will take a broad view of marketing strategy and will lead with Tami the newly centralized advertising and media functions.

• COO Kevin Turner will continue leading the company's worldwide sales, field marketing, services, support, and stores as well as IT, licensing and commercial operations.

• Business Development and Evangelism Group, with Tony Bates in chargem will focus on key partnerships, especially Microsoft's innovation partners, such as OEMs, silicon vendors, key developers, Yahoo, and Nokia, and its broad work on evangelism and 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 with a dotted line to Tony who will work closely with Nick Parker on key OEM relationships.

• Finance Group, led by Amy Hood, will centralize all product group finance organizations. SMSG finance, which is geographically diffuse, will report to Kevin Turner with a dotted line to Amy.

• Legal and Corporate Affairs Group, led by Brad Smith, will continue as General Counsel with responsibility for Microsoft's legal and corporate affairs and will map his team to the new organization.

• HR Group will be headed by Lisa Brummel, who will lead Human Resources and map her team to the new organization.

This process will not be completed overnight, and will actually take the rest of the year "as we figure things out and as we keep existing teams focused on current deliverables like Windows 8.1, Xbox One, Windows Phone, etc." said Ballmer.

The new Microsoft

There is more to this than just the surface changes, though. The point of the restructuring is to rally the company behind a single strategy, Ballmer said.

"It is also clear to me and our leadership that we must do an extraordinary job to succeed in this modern world," he said.

While Microsoft has "delivered many great products and had much success in market," he wants them to do even better.

"That means better execution from product conceptualization and innovation right through to marketing and sales. It also means operational excellence in cloud services, datacenter operations, and manufacturing and supply chain that are essential in a devices and services world. To advance our strategy and execute more quickly, more efficiently, and with greater excellence we need to transform how we organize, how we plan and how we work," he wrote in the e-mail.

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