Microsoft announces sweeping reorganization

July 11, 2013

Microsoft announced a sweeping corporate reorganization Thursday that attempts to pull the firm into a better position to compete more fiercely with Apple and Google.

Under the new structure, called “One Microsoft,” Microsoft will have half as many major divisions — four instead of eight. Instead of having separate teams in charge of developing software for tablets, laptops and smartphones, all of those developers will now report to the same person.

The realignment “will enable us to innovate with greater speed, efficiency and capability in a fast changing world,” chief executive Steve Ballmer said in a company-wide memo Thursday. “We are rallying behind a single strategy as one company — not a collection of divisional strategies.”

The old structure prevented the company from quickly reacting to developments in the tech world, analysts said. It was slow, for example, to turn its attention from its traditional desktop and laptop market to that of smartphones and tablets, they said.

“The divisions realized they had to align more closely,” said Al Hilwa, an analyst for the International Data Group. “Apple and Google are less divided.”

The changes could boost Microsoft’s efforts to capture more of the smartphone and tablet markets, analysts said, which include the launch of a new smartphone operating system and the introduction of the firm’s own tablet, the Surface. Microsoft has struggled to make a dent in either market. The Surface, for example, has yet to make much headway against Apple’s iPad and tablets running Google’s operating system.

The efforts have been spurred in part by slumping PC sales, which dropped another 11 percent during the second quarter, according to technology-research firm Gartner.

Ballmer acknowledged that the habits of Microsoft’s audience are shifting away from the company’s core products. “As technology moves from people’s desks to everywhere in their lives, it should become simpler, not more complex,” he said. “And our products and services should operate as one experience across every device.”

Under the new structure, all of the company’s operating systems — for smartphones, tablets, PCs — will fall under one department. All hardware development, including that of the Xbox console and Surface tablet, will fall under a separate division.

This new structure also will attempt to address the frustration many developers have expressed regarding the company, analysts said. Apple and Google each have one operating system for their mobile devices. Microsoft has three.

That has likely hampered Microsoft’s ability to build a strong ecosystem of apps that will attract consumers, analysts said. “That’s something that Microsoft has to handle over the next 12 to 18 months,” said Hilwa. “Ideally, it should have been done a year ago.”

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Hayley Tsukayama covers consumer technology for The Washington Post.
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