Massive Microsoft reorg unifies the company: ‘One Strategy, One Microsoft’

Microsoft’s leaders have greatly reorganized the company to boost innovation and better unify products and services being developed by its business groups.

Microsoft offers an unwieldy number of products and services including Windows, Windows Phone, Xbox, Office, Bing, Skype, Azure, Surface, Windows Server, and more. And the company has about 97,000 employees across the globe. So you can see why it might want to realign as it continues to grow.

In a lengthy memo, CEO Steve Ballmer explains that the experiences modern consumers are having across PCs, phones, and TVs need to be better unified:

As devices proliferate, it has become clearer that consumers crave one experience across all of their technology. Yet today, they often face different experiences on their PC as compared to their phone or their tablet. As technology moves from people’s desks to everywhere in their lives, it should become simpler, not more complex. And our products and services should operate as one experience across every device.

Together, the leadership team looked at how we could renew and reorient Microsoft for this new time. We focused on how we could continue our mission of improving and empowering people’s lives through technology but with a new North Star far beyond putting a PC on every desk and in every home.

In the end, we realized our strengths are in high-value activities, powering devices and enterprise services. And we realized we could bring those strengths together in a unique, differentiated experience that will delight consumers and customers.

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.

Microsoft previously had five business units: Windows, Server and Tools, Microsoft Business Division, Entertainment and Devices, and Online Services. Each unit had its own president and CFO.

Those have been replaced with four main engineering groups and four leaders, each with considerable oversight power.

Even though Microsoft is attempting to make the organization simpler, it’s not exactly easy to parse. Here’s how Microsoft explains the new groups and who is leading each team (the first four are the new main groups):

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. (Windows, Windows Phone, Xbox, and attached services)

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. (Surface, Xbox gaming and music, mice, keyboards, etc.)

Applications and Services Engineering Group: Qi Lu will lead broad applications and services core technologies in productivity, communication, search and other information categories. (Office, Bing, MSN, Dynamics CRM and ERP, Skype, Yammer, Lync, etc.)

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. (Windows Server, Windows Azure, System Center, SQL Server, Visual Studio, etc.)

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 Group 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.

Looking at the top of the list, it appears Terry Myerson, Julie Larson-Green, and Qi Lu have been given the most power. Myerson has been given a substantial bump from overseeing Windows Phone to controlling all operating systems. Larson-Green gets control of Microsoft hardware and entertainment, while Lu oversees powerhouse apps like Office, Yammer, and Skype.