Microsoft Corp. is reshuffling its business in an attempt to promote faster innovation and a sharper focus on devices and services. The move by the world's largest software maker comes amid a steady decline in demand for PCs as people turn to tablets and other mobile gadgets.
CEO Steve Ballmer said in a memo to employees on Thursday that the changes mean the company is "rallying behind a single strategy" and organizing by function. While it has been widely anticipated, it's too early to tell how well the reorganization will help Microsoft compete with more nimble rivals like Apple and Google.
"Although we will deliver multiple devices and services to execute and monetize the strategy, the single core strategy will drive us to set shared goals for everything we do. We will see our product line holistically, not as a set of islands," Ballmer wrote.
The company's new divisions include engineering, marketing and business development. Microsoft named veteran executive Julie Larson-Green head of its devices and studios engineering group, overseeing hardware development, games, music and entertainment. She had been promoted in November to lead all Windows software and hardware engineering after Steven Sinofsky, the president of its Windows and Windows Live operations, left the company shortly after the launch of Windows 8.
Terry Myerson will lead Microsoft's operating systems and engineering group, namely Windows. Qi Lu will head applications and services.
Ballmer stressed the company's focus on "one Microsoft" in his memo. He said Microsoft will move forward operating as a cohesive company rather than a "collection of divisional strategies."
Janney Capital Markets analyst Yun Kim said the reorganization helps align Microsoft's various divisions around its devices and services strategy, but added that he's taking a "wait and see" approach.
"We continue to look for signs on how the company can leverage its success in the Xbox business to re-energize its current efforts in the tablet and smartphone markets," the analyst wrote in a note to investors.
Microsoft shares rose 67 cents to $35.37 in early afternoon trading. The Redmond, Washington-based company's stock is up 32 percent since the start of the year, compared with a 17 percent increase of the Standard & Poor's 500 index.