Home Industry Strategy Microsoft restructures for the New World

Microsoft restructures for the New World

Microsoft CEO Steven Ballmer has announced the biggest ever company restructure, in an attempt to reposition the company for the challenges of a very different competitive environment.

Microsoft is still the world’s biggest software company, but it has struggled in recent years. It has stuck to its once successful model of packaged software, with its Windows operating system and Office applications software remaining the default for most individuals and organisations.

But new rivals, new technologies and new business models have threatened Microsoft’s dominance. It is increasingly seen as an old world company, one that has failed to move with the times. The restructure is an attempt to redress the balance.

The restructure was announced in a memo to Microsoft employees. It is a long and complex document, full of the new age corporate platitudes Ballmer is notorious for. But basically Ballmer is saying that Microsoft needs to move with the times, and present a more unified front to the market.

The main effect for consumers will be more emphasis on selling services, rather than product. This has already started, with the move to Office 365, but expect to see a lot more of it. “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.

Blah blah blah. There’s a lot of it – over 3000 words of often obtuse and barely penetrable Ballmer-speak. IT website All Things Digital has published Ballmer’ strategy document and email in full, if you have time.

“As the times change, so must our company,” said Ballmer in the email. “With the more recent growth of broadband and the mobile Internet, as well as the development of newer devices such as tablets and smartphones, consumers’ experiences and use of technology have fundamentally changed again.

As devices proliferate, it has become clearer that consumers crave one experience across all of their technology. Yet today, they often face different experiences on their PC as compared to their phone or their tablet. 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.”

Ballmer talks about the need to “renew and reorient Microsoft for this new time.” It is a constant theme in the memo and accompanying strategy document.

“Our strengths are in high-value activities, powering devices and enterprise services. We can bring those strengths together in a unique, differentiated experience that will delight consumers and customers. Today, we are announcing a far-reaching realignment of the company that will enable us to innovate with greater speed, efficiency and capability in a fast changing world.

“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 monetise 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.

“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 major Microsoft product groups wll now be:

  • Operating Systems Engineering Group. All OS work for console, mobile devices, PCs, and back-end systems. The core cloud services for the operating system will be in this group.
  • Devices and Studios Engineering Group. All hardware development and supply chain ‘from the smallest to the largest devices we build’. Includes all ‘studios experiences’ such as games, music, video and other entertainment.
  • Applications and Services Engineering Group. Applications and services core technologies in productivity, communication, search and other information categories.
  • Cloud and Enterprise Engineering Group. Back-end technologies like data centre, database and specific technologies for enterprise IT and development tools. Includes Microsoft’s data centre development, construction and operation.

It goes on. And on, and on, and on.


Did you know: Key business communication services may not work on the NBN?

Would your office survive without a phone, fax or email?

Avoid disruption and despair for your business.

Learn the NBN tricks and traps with your FREE 10-page NBN Business Survival Guide

The NBN Business Survival Guide answers your key questions:

· When can I get NBN?
· Will my business phones work?
· Will fax & EFTPOS be affected?
· How much will NBN cost?
· When should I start preparing?


Graeme Philipson

Graeme Philipson is senior associate editor at iTWire and editor of sister publication CommsWire. He is also founder and Research Director of Connection Research, a market research and analysis firm specialising in the convergence of sustainable, digital and environmental technologies. He has been in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism.