New Microsoft structure aimed at greater collaboration

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Posted: Friday, July 12, 2013 12:00 am

Microsoft is breaking up its fiefdoms as it seeks to create better products, faster.

The company said Thursday that it would dissolve its eight existing product divisions in favor of four new ones arranged around broader themes, a change it believes will encourage greater collaboration. Steven Ballmer, Microsoft’s longtime chief executive, will shuffle the responsibilities of nearly every senior member of his executive bench as a result.

The shake-up is an effort by Microsoft to reduce the rivalries that have built up over time among its previous divisions, which sometimes resulted in needless duplication of effort. Each one of the old divisions had its own finance and marketing organizations, and in the revamping, Microsoft is centralizing those functions.

The new divisions are meant to effectively force its groups to work more closely together to create complete products consisting of hardware, software and services.

It is not clear, though, that simply revamping the company’s structure will enable Microsoft to create products that are more timely and resonate more with customers. Microsoft has been widely criticized for being late with compelling products in two lucrative categories, smartphones and tablets.

For the last year, Ballmer has talked increasingly about transforming Microsoft into a “devices and services” company, a sign that the company needs to evolve from its roots as a pure software company to pay more attention to all the ingredients that make modern devices appealing. That is one area where a Microsoft rival, Apple, has excelled.

While the company is emphasizing hardware more prominently in its new organization, Microsoft does not, for the time being, appear to be abandoning its strategy of working with outside manufacturers of personal computers and mobile phones.

Among the top executives named to new roles is Julie Larson-Green, who had overseen the development of the Windows operating system. She will lead a new devices and studio group that consists of Xbox hardware, the Surface family of tablet computers, hardware accessories and games.

Microsoft will consolidate all its major operating systems, including Windows, Windows Phone and the software that powers the Xbox, under Terry Myerson, who handled engineering for only Windows Phone before.

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