Steve Ballmer is reportedly going to announce his plans for a massive reorganization of Microsoft's corporate structure on Thursday.
This reorg will shape the remaining years of Ballmer's tenure as CEO.
In the past, he's told executives at Microsoft he plans to stay on as chief until his youngest child is in college, which would be around 2017, or 2018. Assuming he hasn't changed his mind, this reorg will probably be his last big structural change to Microsoft's org chart before he leaves.
Drips of information have leaked on what Ballmer's planning, but much of the change is still unknown, since this is Ballmer's plan and he's keeping it fairly private.
However, you don't need an inside source to figure out his priorities. Ballmer told the world what he's planning for Microsoft in a letter to shareholders last year.
Steve Ballmer wants to transform Microsoft from a company of multiple business groups working in relative silos to a truly collaborative company focused on "devices and services".
That last bit is very big inside Microsoft. I was at Microsoft's headquarters a few weeks ago meeting with company execs and getting a tour of the place.
The phrase "devices and services" popped up regularly.
So, what does devices and services mean?
First, let's explain what it doesn't mean.
It doesn't mean copying Apple and becoming a vertically integrated company that controls everything from top to bottom.
Sure, Microsoft released the Surface. And it has the Xbox. And it will do more hardware in the future.
But that doesn't mean it's going down Apple's route.
Microsoft wants to do a half-way Apple.
It wants its partners to build top-notch devices that run Microsoft's services flawlessly out of the box. To do this, Microsoft wants to work more closely with its hardware partners, and give them a tight set of parameters for manufacturing Windows-based devices.
In this way, it gets a variation in devices like Google has with Android, but with less fragmentation and bad user experiences.
Here's Ballmer's explanation of what devices and services means from his shareholder letter:
We will continue to work with a vast ecosystem of partners to deliver a broad spectrum of Windows PCs, tablets and phones. We do this because our customers want great choices and we believe there is no way one size suits over 1.3 billion Windows users around the world. There will be times when we build specific devices for specific purposes, as we have chosen to do with Xbox and the recently announced Microsoft Surface. In all our work with partners and on our own devices, we will focus relentlessly on delivering delightful, seamless experiences across hardware, software and services. This means as we, with our partners, develop new Windows devices we'll build in services people want. Further, as we develop and update our consumer services, we'll do so in ways that take full advantage of hardware advances, that complement one another and that unify all the devices people use daily. So right out of the box, a customer will get a stunning device that is connected to unique communications, productivity and entertainment services from Microsoft as well as access to great services and applications from our partners and developers around the world.
If you glossed over that paragraph, stop right now, and re-read it. It's Ballmer's manifesto for how he wants Microsoft to operate in the next five years.
Over the years, investors, analysts, and pundits have called for Microsoft to break up. Even today, one of the most respected Microsoft analysts, Rick Sherlund at Nomura, believes Microsoft should be broken up. He thinks the Xbox division should be spun out, Bing should be sold off, and headcount should be reduced.
Ballmer, clearly, doesn't agree.
If anything, now, more than ever, Microsoft can use its multiple business groups to deliver high-quality computing experiences that rival Apple and Google.
Microsoft's suite of services are probably the best in tech right now: Office, Skype, SkyDrive, Bing, and Xbox Live can go head-t0-head with anything Apple or Google offer.
But, Microsoft is falling behind those companies because it hasn't successfully married those services with good devices.
There are a few reasons Microsoft failed to combine its services with good devices.
First, it's still suffering a hangover from when the Justice Department blocked it from bundling its services. That had a big impact on how Microsoft operated, and it's just getting over it.
Second, it didn't have Windows Phone, or Windows 8, which are platforms that allow for all its services to be delivered in one unified experience.
With Windows 8 in place, Ballmer can fit all the pieces of Microsoft together into the devices and services company he envisions.
That's what his reorg should do. It should realign the company around his vision of creating high-quality devices seamlessly operating Microsoft's software and services.
As for the particulars of the reorg, we'll find out soon enough.
