Ballmer Writes Lengthy Memo On Microsoft's "Far-Reaching" Company Re-Org

Microsoft CEO Steve Ballmer wrote a lengthy email and memo to the company today detailing a new direction for Microsoft, including a massive reorganization and revamped focus. Primarily, Microsoft will no longer operate as a series of islands, with many departments all working on different projects; instead, under the banner of “One Microsoft”, the company’s many groups will all contribute holistically to developing products and services.

Microsoft will be organized according to function, so the major groups will be: “Engineering (including supply chain and datacenters), Marketing, Business Development and Evangelism, Advanced Strategy and Research, Finance, HR, Legal, and COO (including field, support, commercial operations and IT).” Each group will have a “champion” that reports directly to Ballmer.

Within the engineering area, there will be four areas--OS, Apps, Cloud, and Devices--while Dynamics will remain separate because it requires “special focus”.

Steve Ballmer, reorganizing Microsoft

“Going forward, our strategy will focus on creating a family of devices and services for individuals and businesses that empower people around the globe at home, at work and on the go, for the activities they value most,” wrote Ballmer. “The form of delivery shifts to a broader set of devices and services versus packaged software.”

With a focus on both consumer and enterprise markets, Microsoft will continue to develop integrated services that run on both first-party and partner devices, with a strong focus on unifying all of its apps, stores, operating systems, and other software and services to work seamlessly across all screens. “Our family [of devices] will include phones, tablets, PCs, 2-in-1s, TV-attached devices and other devices to be imagined and developed,” wrote Ballmer.

What that strategy means exactly is that while some services and devices will become better, more efficient, and more empowered, others--such as Windows RT, which functions somewhat all by itself, with its (very limited) app store--may get the axe entirely.

Microsoft products, which will be realigned under "One Microsoft"
Most of Microsoft's products, which are numerous

Ballmer believes that no company is better suited than Microsoft to achieve these lofty goals. He wrote, “With these innovations in software, hardware and services, we will develop the only ecosystem that promotes variety in hardware but coherence in the user experience. Other companies do one without the other.”

The process or reorganizing will take through the end of 2013, and it will see a few high-level employees retire, including Kurt DelBene and Craig Mundie.

Microsoft headquarters in Redmond
On Microsoft's Redmond campus (Credit:

A good company knows when its time to pivot and shift as the times change, and you have to give Microsoft some credit for working toward the future and not just sitting back and raking in money hand over fist from its many products and services, squeezing every last drop of value from them before allowing itself to be passed by as other companies innovate.

Although obviously Microsoft has plenty of cloud offerings now, including Azure, SkyDrive, and Office 365, it’s not a cloud company per se; however, in aligning with Ballmer’s vision of a bunch of device and a cloud, Microsoft can do what it’s always done best--make software. It’s just that the software operates in a different paradigm than it did decades ago. And it also appears that Microsoft will augment that strategy by continuing to build its own hardware.

The Microsoft brass know that it’s do or die time; if it’s going to continue to compete with all the upstart tech companies as well as the other juggernauts such as Google and Apple, it has to evolve.

For the full list of all the group changes and who reports to whom, see below:

Operating Systems Engineering Group. Terry Myerson will lead this group, and it will span all our OS work for console, to mobile device, to PC, to back-end systems. The core cloud services for the operating system will be in this group.
Devices and Studios Engineering Group. Julie Larson-Green will lead this group and will have all hardware development and supply chain from the smallest to the largest devices we build. Julie will also take responsibility for our studios experiences including all games, music, video and other entertainment.

Applications and Services Engineering Group. Qi Lu will lead broad applications and services core technologies in productivity, communication, search and other information categories.

Cloud and Enterprise Engineering Group. Satya Nadella will lead development of our back-end technologies like datacenter, database and our specific technologies for enterprise IT scenarios and development tools. He will lead datacenter development, construction and operation.

Dynamics. Kirill Tatarinov will continue to run Dynamics as is, but his product leaders will dotted line report to Qi Lu, his marketing leader will dotted line report to Tami Reller and his sales leader will dotted line report to the COO group.

Advanced Strategy and Research Group. Eric Rudder will lead Research, Trustworthy Computing, teams focused on the intersection of technology and policy, and will drive our cross-company looks at key new technology trends.

Marketing Group. Tami Reller will lead all marketing with the field relationship as is today. Mark Penn will take a broad view of marketing strategy and will lead with Tami the newly centralized advertising and media functions.

COO. Kevin Turner will continue leading our worldwide sales, field marketing, services, support, and stores as well as IT, licensing and commercial operations.

Business Development and Evangelism Group. Tony Bates will focus on key partnerships especially our innovation partners (OEMs, silicon vendors, key developers, Yahoo, Nokia, etc.) and our broad work on evangelism and developer outreach. DPE, Corporate Strategy and the business development efforts formerly in the BGs will become part of this new group. OEM will remain in SMSG with Kevin Turner with a dotted line to Tony who will work closely with Nick Parker on key OEM relationships.

Finance Group. Amy Hood will centralize all product group finance organizations. SMSG finance, which is geographically diffuse, will report to Kevin Turner with a dotted line to Amy.

Legal and Corporate Affairs Group. Brad Smith will continue as General Counsel with responsibility for the company's legal and corporate affairs and will map his team to the new organization.

HR Group. Lisa Brummel will lead Human Resources and map her team to the new organization.