What Will Microsoft's Reorganization Mean for You?

This week, Microsoft CEO Steve Ballmer is expected to announce a major overhaul of the company's management structure. So what, you ask? Well, depending on how this shakes out, it could end up having some significant ramifications on the products and services you use.

According to various news sources, Microsoft's upcoming reorgnization looks like this:

  • New cloud computing and business-focused products unit
  • Online services to add Microsoft Office and other apps
  • New device hardware division to encompass everything from the Xbox to Surface tablets, music and TV services
  • Windows Phone and Windows operating system to be merged into one division

While this may seem like yawnable stuff, it's actually quite significant. The primary goal here appears to be to make its product lines more streamlined, efficient and cohesive - leading to better product development and a more manageable product cycle. But these moves could also let Microsoft shelter products in development from the prying eyes of Wall Street - giving them more time to mature before they have to meet high financial performance expectations. Also, this corporate overhaul could set the stage for a major rebranding effort by Microsoft in the next two to three years. 

As with any substantial change at a major company, there will be positives and negatives. First, the positives:

  • User experience across all devices could improve - By having one executive in charge of all major devices (excepting Windows Phone, of course), we're likely to see a more uniform and consistent user experience across device platforms. 
  • Better web services - Similarly, we could see Microsoft's numerous 'one-off' properties like Bing, MSN, SkyDrive, Office, Skype, etc. become more integrated and streamlined into a more cohesive user experience. It could also create a 'Google effect' for Bing -- where everything feeds back to search and boosts its performance.
  • More protection for integral products - Under the reorg, the financial performance of new products and services could be harder to pinpoint - that's bad news for investors, but good news for consumers who are tired of seeing products and services jettisoned because they don't financially perform right out of the box. Some products take time to mature, and this new model could help.
  • Rapid release cycle - At the Build conference last month, Ballmer spoke of a changing culture at Microsoft - and he emphasized the company's shift toward a "rapid release cycle." The new streamlined organization at Microsoft should make it easier to achieve that goal - as product teams now have a better leadership hierarchy, enjoy stronger integration and can work more efficiently to meet division goals. 
  • Microsoft products - Ballmer has said he wants to change the company from a pure-play software vendor to one of "devices and services." This reorganization is perfectly inline with that goal - and sets the stage for more Microsoft-branded products down the road - like the Surface tablet. Product development is a slippery slope for Microsoft, due to its reliance on third-party manufacturers - so I don't expect to see this sort of thing happen overnight, but the company will gradually move in this direction.

So what's the downside? Here are a few issues that could plague consumers:

  • Innovation roadblocks - By dividing the software and hardware teams into separate units, it's going to diminish the company's ability to achieve bottom-up innovation (i.e., by the engineers and programmers) - replacing it instead with top-down innovation (i.e., ideas, projects initiated from the management teams and executives). Bottom-up innovation is important within a technology company, because it's those pet projects, betas within betas and outside the box thinking that often leads to the real breakthroughs. When inspiration comes out of the management suite, it tends to be more holistic, financially motivated and practical - not disruptive.
  • Xbox could lose its edge - Under the old system, Xbox was essentially an independent company within Microsoft, with its own leadership completely focused on the gaming industry. That's what helped to make it so successful - and, in fact, it's the only consumer product at Microsoft that is still an industry leader and a hit with consumers. But under the reorganization, the Xbox company is being turned back into a subset of a corporate division. Without the dedicated leadership team and the independence to make its own calls, Xbox could start losing its competitive edge. 

What do you think Microsoft's reorganization will change about the company? What changes do you want to see? Drop a line in the comment section below.