Microsoft's sweeping reorganization shifts focus to services, devices

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Microsoft (NASDAQ:MSFT) confirmed a much-rumored company-wide reorganization on Thursday, announcing it will focus its efforts on delivering services and devices for individuals and businesses optimized for use at home, at work and on the go.

"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," Microsoft CEO Steve Ballmer said in a memo to employees. "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. Together, the leadership team looked at how we could renew and reorient Microsoft for this new time. We focused on how we could continue our mission of improving and empowering people's lives through technology but with a new North Star far beyond putting a PC on every desk and in every home. In the end, we realized our strengths are in high-value activities, powering devices and enterprise services. And we realized we could bring those strengths together in a unique, differentiated experience that will delight consumers and customers."

Moving forward, Microsoft will realign its corporate structure by function. "There will be four engineering areas: OS, Apps, Cloud, and Devices," Ballmer explained. Moving forward, Windows Phone Corporate Vice President Terry Myerson will lead the Operating Systems Engineering Group, which will span all OS work from mobile devices to consoles to PCs to back-end systems. Qi Lu will lead the Applications and Services Engineering Group, which encompasses broad apps and services core technologies in productivity, communication, search and other information categories. Julie Larson-Green will oversee the Devices and Studios Engineering Group, which includes hardware development and supply chain as well as all games, music, video and other entertainment, and Satya Nadelia will lead the Cloud and Enterprise Engineering Group.

"We will strive for a single experience for everything in a person's life that matters," Ballmer said. "One experience, one company, one set of learnings, one set of apps and one personal library of entertainment, photos and information everywhere. One store for everything. Microsoft has the clear opportunity to offer consumers a unified experience across all aspects of their life, whether the screen is a small wearable, a phone, a tablet, an 85-inch display or other screens and devices we have not yet even imagined."

Ballmer said Microsoft's efforts will emphasize what he calls "high-value activities" based around areas like personal expression, decision-making and tasks, social communication and "serious fun"--i.e., gaming and interactive entertainment. "No technology company has as yet delivered a definitive family of devices useful all day for work and for play, connected with every bit of a person's information available through one cloud," Ballmer stated. "We see tremendous room for innovation in software, services and hardware to bring the consumer this new, more complete and enveloping experience."

Microsoft faces an uphill climb in its efforts to disrupt the mobile ecosystem status quo. Despite positive reviews for its Windows Phone 8 mobile OS, consumers have been slow to embrace the platform: WP8 devices accounted for just 4.6 percent of all smartphones sold in the U.S. during the three-month period ending in May 2013, increasing from 3.7 percent in the year-earlier period, according to a recent report issued by research firm Kantar Worldpanel ComTech. Google's (NASDAQ:GOOG) Android mobile operating system powered 52 percent of all smartphones sold in the U.S. between March 1 and May 31, followed by Apple's (NASDAQ:AAPL) iOS at 41.9 percent.

For more:
- read Ballmer's memo
- read this AllThingsD article

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