speed the pace of innovation at the software giant.
The reorganization, outlined in a memo by CEO Steve Ballmer to
employees, underscores a Microsoft refocusing on collaboration around
disciplines and engineering areas to move faster.
"The time frame for product releases, customer interactions and
competitive responses are dramatically shorter than ever before,"
Ballmer said on a conference call, about the company's effort to
become more nimble.
The move comes as the company faces a worldwide downturn in PC buyers.
Microsoft is also struggling to gain traction in mobile devices and
services that keep pace with the likes of Apple and Google.
Shares of Microsoft rose 2.8% to $35.69 on Thursday following the
reorganization news.
Ballmer in effect jettisoned the longstanding divisional hierarchy
that took shape under his mentor, company co-founder Bill Gates.
Certain business functions, including finance, marketing and business
development, will move out of separate divisions and into their own
company-wide groups with overarching senior executives.
The reorganization shifts Microsoft away from a structure centered on
products toward a strategy aimed at how its devices function, says
Forrester analyst Frank Gillett.
"You have a substantially different Microsoft than what we had
yesterday," he says.
Microsoft still continues to rake in huge profits from software
licenses sold to businesses for its Windows PC and server operating
system, and Office software suite. But researchers Gartner and IDC on
Wednesday reported that worldwide PC shipments sank 11% in the second
quarter, the fifth-straight such quarterly decline.
EXECUTIVE SHUFFLE
Terry Myerson, who now heads up Windows Phone, will be the executive
vice president for operating system engineering, overseeing Windows,
Windows Phone and the Xbox operating system.
Satya Nadella, chief of Microsoft's server and tools group, has been
named executive vice president for cloud and enterprise engineering,
adding oversight of the company's data center network, known as Global
Foundation Services, to his responsibilities.
Julie Larson-Green, head of Windows engineering, will rise to
executive vice president of devices and studio engineering, including
the Microsoft Surface tablet, the Xbox hardware and mice and
keyboards.
And Qi Lu, chief of Bing and online services, will become executive
vice president of apps and services engineering, adding most of
Microsoft Office plus Skype, the Lync communications service and the
Yammer business social network.
Notably, Kurt DelBene, president of the Microsoft Office Division,
will be retiring, and Rick Rashid, the longtime Microsoft Research
chief, will "move into a new role driving core OS innovation in our
operating systems group," according to Ballmer's memo.
Last week, Xbox chief Don Mattrick, announced his departure to become
CEO of game maker Zynga.
Bill Smead, CEO of Smead Capital Management, said that Microsoft's
share price has languished for more than a decade. Last year, Smead
Capital divested a large block of Microsoft shares, which it had held
for years.
"Vision has been missing, and no amount of reshuffling can make up for
a lack of vision," says Smead. "Without a vision and a cause,
reshuffling just buys time."
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