Ballmer Reorganizes Microsoft to Respond to Post-PC World

Facing declining PC sales, Microsoft reshuffles with a focus on operating systems, apps, devices and the cloud.

Microsoft CEO Steve Ballmer announced on July 11 that the company he helms is undergoing a profound transformation to meet the challenges posed by the post-PC era. The restructuring efforts will enable the company "to innovate with greater speed, efficiency and capability in a fast changing world," he said in an internal email to employees.

The move comes amid a sustained slowdown of the PC market, which Microsoft Windows dominates.

According to preliminary figures provided by Gartner, PC shipments for the second quarter of 2013 dropped 10.9 percent over the same year-ago period. PC vendors shipped a total of 76 million units in 2Q13 compared with 85.3 million in 2Q12.

PC shipments dipped below 80 million units in the first quarter of 2013 for the first time since 2009. Meanwhile, the tablet market continues to set records.

"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," said Ballmer in a separate company memo. "We have entered an always-on, always-connected era that holds new promise for what technology can bring to people's lives and to businesses everywhere on the planet."

To bring Microsoft's business operations into better alignment with this new landscape, Ballmer said that his company is "rallying behind a single strategy as one company—not a collection of divisional strategies."

Suggesting that the software giant will pursue a policy of increased internal cross-collaboration, he continued, "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," said Ballmer.

Going forward, the company's product development efforts will fall into four major engineering areas, namely OS, Apps, Cloud and Devices. Dynamics, Microsoft's enterprise resource planning (ERP) and customer relationship management (CRM) division, will remain separate for the time being "as it continues to need special focus and represents significant opportunity," said Ballmer.

Internally, the company will be reorganized by function. These departments include Marketing, Business Development and Evangelism, Advanced Strategy and Research, Finance, HR and Legal. In addition, supply chain and data centers will fall under the purview of Engineering while the COO's office will be responsible for IT, field, support and commercial operations, according to the company.

As with most major restructurings, the company's org chart is also being reshuffled.

Microsoft's Operating Systems Engineering group will be headed by Terry Myerson, while Julie Larson-Green will take the reins of Devices and Studios Engineering. Leading the Applications and Services Engineering group will be Qi Lu. Satya Nadella will direct Cloud and Enterprise Engineering. Kirill Tatarinov will continue to lead Dynamics.

Kevin Turner stays on as COO. Marketing, with its "newly centralized advertising and media functions," will be headed by Chief Marketing Officer and Chief Financial Officer Tami Reller and strategist Mark Penn.

Microsoft Office head Kurt DelBene is retiring from the company after more than 20 years of service. Craig Mundie, said Ballmer, "will be stepping off the SLT to devote 100% of his time to a special project for me through the end of this calendar year." Mundie is set to depart Microsoft at the end of 2014.

Pedro Hernandez

Pedro Hernandez

Pedro Hernandez is a contributor to eWEEK and the IT Business Edge Network, the network for technology professionals. Previously, he served as a managing editor for the network of...