Redmond View

Redmond Refines Business Focus with 'One Microsoft'

Microsoft's recent organizational changes are aimed at bringing a more unified customer experience.

• By Jeffrey Schwartz
• 07/30/2013

Microsoft CEO Steve Ballmer's realignment of the company's engineering and marketing structure last month was the most sweeping organizational overhaul since 2005, when Microsoft created the product-focused business units with autonomy to chart their own paths. Ballmer's new "One Microsoft" organization is nothing less than an inflection point for the company.

It appears the divisional autonomy of the previous structure stifled Microsoft's ability to respond to the competitive forces led by Apple and Google. Those companies delivered a radical new class of widely sought-after devices tied to app services that Microsoft couldn't successfully replicate -- namely smartphones and tablets. The ability of those companies to change the way people procure software and create and access information stunted Microsoft's own growth. Confounding matters for Microsoft was the ability of its rivals and their respective development communities to rapidly iterate.

Despite Microsoft's best efforts to respond, the silos of its organizational structure weren't conducive to delivering on Ballmer's proclamation last year that it would transition from a company that builds software for PCs and servers to one focused on offering devices and services -- and offering those devices and services through Microsoft itself and through its partners. Microsoft's crown jewel remained its ability to develop software for those devices and services.

One Microsoft essentially tears down those silos. The premise of One Microsoft is to offer a unified customer experience and message, afforded by eliminating duplicative and conflicting technology, which had led to well-known fiefdoms within and across product groups. Those fiefdoms, of course, resulted in the company's difficulty in creating symmetry across devices and services.

Now there are four engineering units charged with fixing that problem. The first is an Operating Systems group headed by Terry Myerson, which will oversee engineering and marketing for Windows across all devices and services: Xbox, Windows Phone, Windows 8.x tablets, and PCs, as well as for back-end systems and cloud services such as Windows Server, Windows Azure, and SkyDrive.

The second group, Applications and Services, brings together Office, SharePoint, Lync, Skype and search, under the auspices of Qi Lu. Satya Nadella will oversee the third group (Cloud and Datacenter), which provides engineering of all back-end technologies (databases, tools and development, and operation of datacenters). Finally, Julie Larson-Green will oversee Devices and Studios, including all hardware development and the supply chain and operation of Microsoft online services.

Looming large is that Windows 8 has yet to catch fire and Windows Phone is still barely a blip on the radar. Will this restructuring make it easier to unify Windows?

Time will tell, but on the surface One Microsoft makes sense. Whether Ballmer is turning the ship around or just rearranging the chairs on deck, it will define his legacy. The devil will be in the details.