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Microsoft Reorg Rumors Heat Up

With Windows 8.1 just a few days away, rumors of an impending company shakeup have gained momentum.

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Last October, Microsoft CEO Steve Ballmer wrote in his annual letter to shareholders that the software giant would be transitioning into a "devices and services" company. Microsoft already has made good on this promise in many ways, such as the introduction of its Surface tablets, the first of the devices to which Ballmer ostensibly referred.

But according to new reports, the CEO has even bigger changes planned, namely the first company-wide restructuring of his tenure. The new hierarchy, which could be revealed as soon as July 1, could leave many key executives looking for new jobs.

The timing adds a new level of intrigue to what was already shaping up to be a busy few weeks for Microsoft. On Wednesday, the company will unveil Windows 8.1 at its Build conference in San Francisco, and on July 7, its Worldwide Partners Conference will kick off in Houston.

Citing "numerous sources," All Things D reported Sunday that many Microsoft executives are bracing for departures. Ballmer's planning team has allegedly included only a small group of his direct reports and a handful of board members, and the exclusivity has evidently stoked fears among those on the outside looking in.

"It feels like it is going to be titanic -- that Steve is doing this change for his legacy," a person "close to the situation" told the website, which said Ballmer might share the plan internally by the beginning of next month but that the timing of a public announcement isn't yet clear.

[ What's in the forecast for Microsoft's Build conference? Read Microsoft Build: 7 Things To Expect. ]

Bloomberg reported earlier in June that Ballmer's plan will redistribute Microsoft's businesses, which are currently spread across eight divisions, into four units: enterprise businesses, hardware, applications and services and operating systems.

Sources told The Verge, meanwhile, that the new structure will to some extent merge the Windows and Windows Phone groups. Such a move falls in line with Microsoft's perceived strategy to create a "write once, deploy everywhere" ecosystem, or something like it, by unifying its modern platforms around a common kernel. That vision is moving incrementally toward fruition, and the next steps will likely be among the topics discussed at Build.

Though specific reorganization rumors have flared only in recent weeks, signs of a shakeup have been emerging for months. The status of Azure as a major cloud player, for example, has been a sign of the company's new diversity as a service provider, as has its transition of standalone Office licenses to Office 365's subscription-based, cloud-tethered model. Windows 8, meanwhile, also fits into the "devices and services" plan because of Surface and the pretense behind its massively overhauled UI: to establish a presence in the BYOD and consumerization movements that had been funneling Apple and Android devices into Microsoft's enterprise turf.

But there have also been plenty of behind-the-scenes indications. Earlier in the year, Wall Street commentators were questioning whether Ballmer should be replaced, citing Windows 8's underwhelming debut along with the company's relatively stagnant stock value. It's not surprising, therefore, that Bloomberg links investor pressure to Ballmer's plans. That said, the company's stock has been up since April, when Microsoft announced healthy third-quarter earnings.

For a company as big as Microsoft, Wall Street debate is par for the course, but the departure of several key execs has provided further evidence that something is brewing in Redmond. When Windows chief Steve Sinofsky, arguably the most prominent person to leave, abruptly quit in November, industry observers immediately began speculating that larger changes were coming. The new reports add context to Sinofsky's departure and validate some of those early reactions; according to Bloomberg, Ballmer's plans were already in motion when the Windows boss left.

Microsoft also has appeared eager to pursue major acquisitions and partnerships, a further indication of the machinery that Ballmer is rearranging behind the scenes. Redmond teamed up with Oracle on Monday, for example, to bring support for Oracle's database software to Hyper-V and Azure. Rumors also have suggested the company might buy Nook from Barnes & Noble. Other reports indicated that Redmond considered but abandoned plans to purchase Nokia, and to launch an e-commerce business in the mold of eBay and Amazon.

The moves all fall into Microsoft's stated plan to invest $10.1 billion in specific technology "megatrends:" cloud, social, mobility, big data and touch. Microsoft is hardly the only company that sees the opportunities in these areas, however, and Ballmer's new structure, once it is disclosed, might reveal how Redmond plans to navigate the crowded field.

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User Rank: Strategist
7/11/2013 | 12:04:52 AM
re: Microsoft Reorg Rumors Heat Up

X-Treme-LOL! OMG I can't stop laughing. That was the best one I've come across since Sesame Street Crayola 8.
User Rank: Strategist
7/11/2013 | 12:00:41 AM
re: Microsoft Reorg Rumors Heat Up
"The new hierarchy, which could be revealed as soon as July 1, could leave many key executives looking for new jobs."

aka A massive downsizing.

"Bloomberg reported earlier in June that Ballmer's plan will redistribute Microsoft's businesses, which are currently spread across eight divisions, into four units"

aka a 50% cut in head count.

The reality?

MicroKlunk, aka Mafiasoft, aka Micro$haft is shrinking due to the 27% reduction in WindoZe & Office sales & zero percent mobile traction in a bourgeoning market.

Oh by the way, did you know that only Windoze & Office licenses are the only Microsoft cash cows? Yes that is a fact!

So say it like it really is:

Balmer is downsizing to try to stay in business!

My prediction: In two years Microsoft will have 75% less employees and most users
will have migrated to Linux platforms using the cloud to run their legacy M$ apps like Office.
User Rank: Apprentice
6/26/2013 | 6:19:56 AM
re: Microsoft Reorg Rumors Heat Up
They only must do one thing: STOP SELLING SH1TTY VISTABOB 8 !
Faye Kane, homeless brain
Faye Kane, homeless brain,
User Rank: Strategist
6/26/2013 | 4:08:05 AM
re: Microsoft Reorg Rumors Heat Up
Peter principle, BOOOOY have you got that right.

The man never was any more than a marketing frat boy who misinterpreted Gates' genius and the rise of the PC as his own business and finance acumen.

I said last year that Win 8 would bomb big (which was obvious), and that by the summer, Steve "Developers! Developers!" Ballmer would stand in front of the Board and blame his subordinates, the media, and the users for his latest screw-up.

His "reorganization" will involve firing whatever smart managers still work in Redmond and replacing them with yes-men. My guess is that Sinofsky knew better than Metro, but did what he was told, then immediately abandoned the Titanic he helped sink.

I bet Ballmer even fires engineers so he can double his army of fake shills pretending to be real people. Then they can post twice as much ridiculous, faux-angry, mean-spirited propaganda in the comments sections of Win 8 articles at industry tabloid sites like this. It's on par with adding one-click access to the Metro main screen and telling us "We gave you back your Start button! See, we listen to you!"

I'd feel embarrassed for the buffoon, but it is SOOO satisfying to watch a clueless, arrogant, incompetent, peter-unprincipled manager get just exactly what he deserves for once.

User Rank: Apprentice
6/26/2013 | 2:42:28 AM
re: Microsoft Reorg Rumors Heat Up
Dear General Steve, Under your watch, the train left the station 3 or 4 years ago. Too little, too late, and antagonizing your base in a desperate Hail Mary (Windows 8). A classic case of Peter's Principle. You reached your level of incompetency many years ago. Time to move on.
Andrew Hornback
Andrew Hornback,
User Rank: Apprentice
6/26/2013 | 1:38:15 AM
re: Microsoft Reorg Rumors Heat Up
There's a lot to speculate about here - maybe Microsoft is finally going to do something with Socl? I think a deal to purchase Nokia might be a good move, especially given the want/need/directive to move further into the device space. Who knows, maybe Microsoft has an answer for Google Glass up their sleeve.

I do think it's very safe to say that Microsoft needs to get some traction and momentum going if they want to stay relevant.

Andrew Hornback
InformationWeek Contributor
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