Microsoft Reorg Aims For Better Collaboration, Engineering Efficiencies

Microsoft consolidated business groups and reorganized management Thursday in an effort to bring down the walls and collaborate more effectively across the organization. The company's recent push to turn Bing into a platform provides some clues into CEO Steve Ballmer's focus on "one strategy, one Microsoft."

Ballmer, in a letter to all, explains how Microsoft's thousands of employees will "execute even better" on its strategy to deliver a "family of devices and services that best empower people for the activities they value most and the enterprise extensions and services that are most valuable to business."

During an analyst conference call, Ballmer said the new structure will help to reduce production cycle times. The biggest change will come from engineering efforts that pull together disparate projects to benefit all hardware and software services, including advertising and search. It aims to bring efficiencies in development and operations, similar to the company's recent announcement to turn its search engine Bing into a platform by opening its Entity application programming interface to developers, allowing them to build apps powered by Bing.

"This new planning approach will look at both the short-term deliverables and long-term initiatives needed to meet the shipment cadences of both Microsoft and third-party devices and our services," Ballmer wrote.

Trip Chowdhry, managing director of equity research at Global Equities Research, said it's still not clear how Microsoft will accomplish the task. "Typically, when people move around in an organization it takes time before everything settles in, and that could create a short-term hiccup for Microsoft," he said. " 

Under the new Microsoft, the areas of search, marketing and advertising services take a pivotal role. Qi Lu, the head of Bing and Microsoft's other Internet initiatives, will lead a new applications group and oversee the company's Office franchise, Skype, as well as technologies in productivity, communications, and search.

"It's notable that Qi Liu, the head of Bing and Microsoft's other Internet and advertising business initiatives, will now head all apps and services," said Russ Mann, Covario CEO. "Perhaps, there's more to read into this."

Among the changes, Satya Nadella takes the lead of the new cloud and enterprise group, managing the network of data centers powering Microsoft's online services.

Tami Reller will lead the internal marketing group. Mark Penn will support a broader view of marketing strategy helping Tami lead the newly centralized advertising and media functions.

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