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7 Reorg Moves Microsoft Should Make

CEO Steve Ballmer's major shake-up of Microsoft is reportedly imminent. Here are seven ways he could lead his company to success.
4. Know When To Play Nice With Others

Rob Helm, a consultant and VP with Directions on Microsoft, said in an interview that many Microsoft customers are dealing with an influx of tablets from other companies, such as Apple and Samsung.

Microsoft "could help with that by focusing more resources on helping companies manage tablets," he said. He stated that Azure could be part of the answer, and that System Center and Windows Intune are important too.

"Coordinating all of this and extending its reach to the devices people are bringing into companies today is something Microsoft has started, but it should be a top priority," he said.

5. Find A Way To Target High-End Users

Steve Ballmer is bullish on hybrid devices that switch between tablet and laptop modes. These devices are getting some traction, but many of the success stories involve ROI plays; that is, the devices are chosen not because they're the most delightful but because they check off a number of needs -- light weight, access to mobile apps, access to x86 software and so on -- at the right price. This budget-friendly strategy can certainly pay off -- but there's a lot of money to be made from affluent users, who not only buy more expensive devices that yield higher margins, but are also likely to invest in apps and additional products in the ecosystem.

Helm said hybrid Win8 tablets appear to target high-end users, such as executives who are constantly moving between airports and meetings. "So far, [the devices] haven't proven compelling enough," he said, adding, "There are increasingly alternatives to Office. It might not be the asset that it used to be."

Johnson offered similar remarks, noting that the "Surface Pro is not setting any sales records," and that Apple, which outsells Windows OEMs in both premium laptops and tablets, "still has the customers that Microsoft wants, especially on the high end."

6. Prioritize Relationships With Developers

The Windows Store now has more than 100,000 apps, and Windows 8.1 will introduce a redesigned storefront that should be easier to navigate, and which could help developers to earn more money. Still, the Win8 Modern app experience is a hollow shell compared to what users enjoy on iOS and Android. Until that changes, Windows 8 will struggle with consumers, limiting not only its BYOD potential but also Microsoft's ability to thwart further encroachment from competitors.

Helm noted that "it's not a question of a single killer application." Windows needs "an insurance application that lets you take pictures and file a claim after an accident, or applications that let you work with your bank," he said. Indeed, while Microsoft is slowly attracting big names such as Facebook, it needs thousands of smaller players to chip in too.

Dave Johnson said that Visual Studio, Microsoft's primary toolkit for developers, is "relatively easy to learn and extremely powerful." He praised its versatility, which can be applied not only to tablets but also to desktops, cloud apps and even software for the data center. Still, he said, "There's a lot of work to be done for [Win8] apps and devices."

7. Streamline Licensing, Not Just Business Units

Microsoft needs a reorg because its various operations have grown too complicated. Some Microsoft customers might say the same thing of its licensing policies.

Helm said that licensing is a challenge because a lot of companies are interested in moving to the cloud but have investments in on-premises software and licenses. They want to leverage these investments, he elaborated, but doing so is confusing.

"Microsoft has tried to give them lots of different ways," Helm stated. "But it's a challenge to cut through the thickets of complexity, and to have customers confident they have the right product."

The difficulty is compounded, he continued, because Microsoft wants -- as Office 365 demonstrates -- to transition customers from standalone licensing to perpetual subscriptions. The fact that Office for the iPhone is only useful with an Office 365 subscription demonstrates the frustrations and complexity that can arise from this effort.

Helm noted that "licensing in the near term is potentially a blocker for getting customers onto tablets, and getting them to use Microsoft's cloud services." If a reorg succeeds in letting Microsoft employees collaborate more effectively with one another, it also needs to succeed in letting Microsoft customers communicate more effectively with the company.