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microsoft.docx
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Microsoft’s Ballmer Said to Plan Broad Restructuring
Microsoft Corp. Chief Executive Officer Steve Ballmer is planning a reorganization aimed at
reducing the number of business units and putting more focus on devices and services,
according to people familiar with the matter. The changes would give greater responsibility to
executives including Satya Nadella, head of the server business, Don Mattrick, who runs Xbox,
Qi Lu, chief of the online group, and Tony Bates, president of Skype, according to two people
who asked not to be identified because the discussions are private. Andy Lees, who has
overseen corporate development and strategy since November, will probably leave the
company in the coming months, the people said. Ballmer, who is struggling to gain share in
mobile-phones and tablets, announced a shift in strategy last year for the world’s largest
software maker to focus on computing devices and Internet-based services. Any staffing
changes will also provide clues as to the executives who may eventually succeed Ballmer. Plans
for the executive shakeup, which Ballmer, 57, has been discussing with the board, are not final
and may still change, the people said. The All Things D blog reported some details of the
restructuring yesterday. The changes are aimed at cut-ting the number of disparate units and
fostering cooperation between products so that Microsoft can better compete against Apple
Inc. and Google Inc., said one person. Peter Wootton, a spokesman for Microsoft, declined to
comment on restructuring or staffing changes. New Structure One idea under consideration by
Ballmer would create four divisions: an enterprise business led by Nadella; a hardware unit
over-seen by Mattrick; an applications and services division under Lu; and an operating-systems
group jointly led by Terry Myerson, Windows phone chief, and Julie Larson-Green, head of
Windows engineering, said one person. Bates would also be given a significant role, said the
person. In April, activist investor Value- Act Holdings LP disclosed a stake of about $1.9 billion in
Microsoft and said the company should become a leader in Web-based cloud computing,
putting more pressure on Ballmer to focus on that area. Microsoft, based in Redmond,
Washington, currently has eight divisions or units, and six presidents. The Windows business
has been run by two vice presidents, Larson-Green and Tami Reller, since Steven Sinofsky was
pushed out in November. The Office unit is run by Kurt DelBene. The reorganization has been
under discussion even before Sinofsky’s ouster, said the people. Ballmer stressed at the time
the need for Microsoft’s groups to better cooperate and for executives to make that happen.
Questions
1. Why does Microsoft need to change the way it organizes its functions and divisions?
2. What changes is CEO Ballmer proposing to make? How will they affect the way the company
operates?
3. Search the Internet and outline the changes Microsoft has since made to its organizational
structure.
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