Microsoft Embraces 'Single Strategy' in Major Company Overhaul

As expected, Microsoft CEO Steve Ballmer today outlined a major structural overhaul of the software giant, an approach that he dubbed "One Microsoft."

The move is intended to boost collaboration and communication among Microsoft's various teams and products. "We will see our product line holistically, not as a set of islands," Ballmer wrote in a memo to staff.

Ballmer outlined some executive shuffles and departures, including Kurt DelBene, who will retire as president of Microsoft's Office division after having been at the firm since 1992. Going forward, Terry Myerson, who has served as head of Windows Phone, will be executive vice president of the operating systems engineering group, which will cover "all our OS work for console, to mobile device, to PC, to back-end systems," Ballmer said.

Rick Rashid will no longer run Microsoft Research and will instead will focus on OS innovation within the OS group. Meanwhile, Craig Mundie - who previously announced plans to retire next year - will be working on a "special project" for Ballmer through the end of 2013 and continue on as a consultant in 2014.

"Going forward, our strategy will focus on creating a family of devices and services for individuals and businesses that empower people around the globe at home, at work, and on the go, for the activities they value most," Ballmer said.

Ballmer hinted at today's reorganization in an Oct. 2012 letter to shareholders, which pointed to a "fundamental shift" that was underway in the tech business.

As a result, "we need to transform how we organize, how we plan and how we work," Ballmer said today.

"Improving our performance has three big dimensions: focusing the whole company on a single strategy, improving our capability in all disciplines and engineering/technology areas, and working together with more collaboration and agility around our common goals," he wrote. "We are rallying behind a single strategy as one company — not a collection of divisional strategies."

Microsoft will be organized by function: engineering (which includes OS, apps, clouds, and devices); marketing; business development and evangelizing; advanced strategy and research; finance; HR; legal; and COO.

"Each discipline will help drive our overall strategy. Each discipline will also be charged with improving our core capabilities in its area. We must improve in all aspects of the business," according to Ballmer.

The shift to "One Microsoft" will take the rest of the year, allowing teams prepping things like Windows 8.1 and the Xbox One to continue their work, Ballmer said.

Windows 8.1 is the first major overhaul to Windows 8, which has received a lukewarm response thus far. It will be released to manufacturers in August and should be available as a free upgrade or on new PCs by the holiday season.

The Xbox One ($200.00 at eBay) is also on track for a holiday 2013 release. It will compete with the Sony PlayStation 4 ($799.95 at Amazon), however, and Microsoft recently had to backtrack on plans to require an always-on Internet connection for the Xbox One after user backlash.

Xbox chief Don Mattrick also recently left the firm to head up the struggling mobile gaming firm Zynga. At the new Microsoft, Julie Larson-Green will be in charge of the devices and studios engineering group, which includes games, video, music, and other entertainment.

Windows Phone, meanwhile, has been making strides, slowly picking up market share around the globe, though it is still dwarfed by Android and iOS. Nokia is expected to release another Windows Phone 8 device this morning in New York; the 41-megapixel Lumia 1020.