Microsoft Reorg Memo: 10 Steve Ballmer Takeaways

The Microsoft Reorg is official. CEO Steve Ballmer's memo was roughly 2,700 words and filled with lofty statements about cloud computing, devices, services, Windows 8, Office 365 and more. But what does it all mean for Microsoft's (MSFT) channel partners and customers? Here are 10 key takeaways.

The VAR Guy

July 11, 2013

5 Min Read
Steve Ballmer39s reorg is official Will Microsoft employees embrace it
Steve Ballmer's reorg is official. Will Microsoft employees embrace it?

The Microsoft Reorg is official. CEO Steve Ballmer's memo, published today, was roughly 2,700 words and filled with lofty statements about cloud computing, devices, services, Windows 8, Office 365 and more. But what does it all mean for Microsoft's (MSFT) channel partners and customers — amid fierce competition from Google (GOOG), Apple (AAPL),, VMware (VMW) and more? Here are 10 key takeaways.

1. Devices and Services: Those are the two key focus areas for Microsoft going forward. But let's clarify the words. Services most likely means subscription services — not consulting services. As for devices, we're all familiar with Xbox and Surface tablets. Mr. Ballmer, when can The VAR Guy expect Surface Smart Phone?

2. Three Variables: Ballmer says improving Microsoft's performance has "three big dimensions: focusing the whole company on a single strategy, improving our capability in all disciplines and engineering/technology areas, and working together with more collaboration and agility around our common goals."

3. End of Silos: It's clear Ballmer does NOT want Microsoft employees to think or work in a vacuum. Instead, he wants employees focused on the greater common good and synergies. The goals is One Strategy, One Microsoft.

He wrote: "We are rallying behind a single strategy as one company — not a collection of divisional strategies. Although we will deliver multiple devices and services to execute and monetize the strategy, the single core strategy will drive us to set shared goals for everything we do. We will see our product line holistically, not as a set of islands. We will allocate resources and build devices and services that provide compelling, integrated experiences across the many screens in our lives, with maximum return to shareholders. All parts of the company will share and contribute to the success of core offerings…"

4. Bing Is Part of Bigger Picture: About one-third into the memo, Ballmer started rattling off the big-name products and services that demand big-time focus. Anybody who thinks Microsoft will punt on money-losers like Bing are dead wrong. He wrote: "Windows, Windows Phone, Xbox, Surface, Office 365 and our EA offer, Bing, Skype, Dynamics, Azure and our servers. All parts of the company will contribute to activating high-value experiences for our customers."

5. The New Organization: Microsoft will now be organized by function. The leaders and focus areas include:

  • Operating Systems Engineering Group. Terry Myerson will lead this group, and it will span all OS work for console, to mobile device, to PC, to back-end systems

  • 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 Microsoft builds. All games, music, video and other entertainment are covered here as well.

  • Applications and Services Engineering Group. Qi Lu will lead this group which includes productivity, communication, search and other information categories.

  • Cloud and Enterprise Engineering Group. Satya Nadella will lead development of back-end technologies like datacenter, database and 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 cross-company looks at key new technology trends.

  • Marketing Group. Tami Reller will lead all marketing with the field relationship as is today.

  • 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 work on evangelism and developer outreach.

  • Finance Group. Amy Hood will centralize all product group finance organizations.

  • 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.

6. Engineering — Four Plus One: Ballmer said there will be four engineering areas: OS, Apps, Cloud, and Devices. The key takeaways: Devices are getting equal footing with Microsoft's software work. Plus, he added: "We will keep Dynamics separate as it continues to need special focus and represents significant opportunity."

7. The Reorg Isn't Done: Ballmer conceded that the changes will take several months to fully implement. He wrote: "We have resolved many details of this org, but we still will have more work to do. Undoubtedly, as we involve more people there will be new issues and changes to our current thinking as well. Completing this process will take through the end of the calendar year as we figure things out and as we keep existing teams focused on current deliverables like Windows 8.1, Xbox One, Windows Phone, etc."

8. Executive Exits, New Responsibilities

  • Kurt DelBene will be retiring from Microsoft. "Kurt has been a huge part of our success in evolving Office to be a great cloud service," Ballmer wrote.

  • Craig Mundie will devote 100% of his time to a special project for Ballmer through the end of this calendar year. Beginning in 2014, Craig will continue as a consultant through his previously agreed upon departure date at the end of calendar 2014.

  • Rick Rashid will step away from running Microsoft Research and move into a new role driving core OS innovation in Microsoft's operating systems group. 9.

9. Missing: The VAR Guy forgot to add #9. 

10. Keys to Success: Ballmer says Microsoft needs to be nimble, communicative, collaborative, decisive, motivated.

Bonus — 11. Catch Phrase?: Ballmer said Microsoft is evolving again, "Because we're not done. Let's go."

Will employees, partners and customers follow? The VAR Guy is watching…

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