Microsoft Reorg Memo Fails to Address Channel Impact

Microsoft Corp., for the seventh time since 2002, has reorganized its management structure as the company transitions toward CEO Steve Ballmer’s vision of becoming a “devices and services” giant, moving away from its software-only legacy.

As a result, Ballmer said in a July 11 memo to employees that the company’s eight product silos are no more; instead, four areas of concentration operating systems, apps, the cloud and devices will replacing those warring units. Microsoft’s corporate culture notoriously has fostered rivalries, rather than cooperation, among divisions. But now, teams in the four core areas will contribute to all Microsoft products, including Windows, Office, Server and Tools, Bing, Xbox and enterprise software, Ballmer said; however, Microsoft Dynamics will remain independent.

“We will see our product line holistically, not as a set of islands,” Ballmer wrote. “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.”

But amid all of the changes, Ballmer failed to mention Microsoft’s channel partner team. Microsoft has not been known for quickly rolling out new products through resellers; in fact, it only just released the Surface for sale through partners. A request to interview Jon Roskill, Microsoft’s channel chief, was not immediately returned.

Meanwhile, Ballmer has dubbed the new approach “One Microsoft.” Part of the aim includes instituting a new management lineup. Here are the changes, outlined by Ballmer:

• Operating Systems Engineering Group. Terry Myerson will lead this group, and it will span all Microsoft 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. Larson-Green also will oversee 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 back-end technologies like datacenter, database and technologies for enterprise IT scenarios and development tools. He will lead datacenter development, construction and operation.
• Dynamics. Kirill Tatarinov will continue to run Dynamics but his product leaders will report to Qi Lu, his marketing leader will report to Tami Reller and his sales leader will 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.
• Marketing Group. Tami Reller will lead all marketing.
• COO. Kevin Turner will continue leading worldwide sales, field marketing, services, support, and stores as well as IT, licensing and commercial operations.

The revamp comes as Microsoft competes against Apple and Google for smartphone, tablet, Internet and apps market share. The company’s Kin device was a resounding flop and the year-old Windows 8 tablet software and the Surface Pro tablet both are up against the more popular Android and Apple iOS. Plus, Microsoft’s Bing search engine lacks Google’s adoption rates and loses millions of dollars annually.

This latest reorg comes after previous, post-Bill Gates attempts to make the company more competitive. Those shifts took place in 2002, 2005, 2006, 2007, 2008, 2010 and 2012.