Microsoft

http://www.nytimes.com/2013/07/12/technology/microsoft9revamps9structure9and9management.html?ref=technology&_r=0&pagewanted=printBNew$York$Times$$$$$$$$$July$11,$2013$Microsoft)Overhauls,)the)Apple)Way)By$NICK$WINGFIELD$SEATTLE$—$A$couple$of$years$ago,$a$satirical$set$of$diagrams$depicting$the$organization$of$Amazon,$Apple,$Facebook$and$other$technology$companies$made$the$rounds$on$the$Internet.$The$chart$for$Microsoft$showed$several$isolated$pyramids$representing$its$divisions,$each$with$a$cartoon$pistol$aimed$at$the$other.$$Its$divisions$will$war$no$more,$Microsoft$said$on$Thursday.$$The$company$said$it$would$dissolve$its$eight$product$divisions$in$favor$of$four$new$ones$arranged$around$broader$functional$themes,$a$change$meant$to$encourage$a$tighter$marriage$among$technologies$as$competitors$like$Apple$and$Google$outflank$it$in$the$mobile$and$Internet$markets.$$“To$execute,$we’ve$got$to$move$from$multiple$Microsofts$to$one$Microsoft,”$Steven$A.$Ballmer,$the$longtime$chief$executive,$said$in$an$interview.$$The$notion$of$organizing$the$company$around$the$trinity$of$modern$technology$products$—$software,$hardware$and$services$—$is$most$famously$used$by$Apple.$It$is$yet$another$sign$of$how$deeply$Apple’s$way$of$doing$things$has$seeped$into$every$pore$of$the$technology$industry.$$And$in$the$process,$some$of$the$biggest$technology$companies$are$starting$to$look$much$more$alike$organizationally.$The$goal$is$to$get$thousands$of$employees$to$collaborate$more$closely,$to$avoid$some$duplication$and,$as$a$result,$to$build$their$products$to$work$more$harmoniously$together.$$“The$current$model$is$obviously$Apple,$given$how$phenomenally$successful$they$have$been,”$said$Kevin$Werbach,$an$associate$professor$of$business$at$the$Wharton$School$at$the$University$of$Pennsylvania.$“What$Apple$has$been$great$at$is$creating$these$experiences.”$$The$changes$at$Microsoft,$a$giant$in$the$tech$industry$for$decades$that$has$stalled$in$the$last$few$years,$echo$similar$moves$at$its$biggest$rivals,$including$some$tweaking$at$Apple.$Craig$Federighi,$who$led$the$development$of$Apple’s$operating$system$for$computers,$was$also$given$oversight$of$much$of$the$operating$system$for$iPhones$and$iPads.$Jonathan$Ive,$the$industrial$designer$behind$the$slick$look$of$Apple$hardware,$took$charge$of$the$interface$of$Apple$software.$At$Google,$the$development$of$operating$systems$for$mobile$devices$and$computers$was$put$into$the$hands$of$a$single$executive,$Sundar$Pichai,$rather$than$two.$$Microsoft$said$on$Thursday$that$it,$too,$would$consolidate$its$major$operating$systems,$including$Windows,$Windows$Phone$and$the$software$that$powers$the$Xbox,$under$Terry$Myerson,$who$handled$engineering$only$for$Windows$Phone$before.$The$underlying$goal$is$to$create$software$with$tighter$linkages$to$power$an$array$of$devices,$making$it$easier$for$people$to$use$their$smartphones,$tablets$and$game$consoles$as$adjuncts$to$one$another.$$But$Microsoft’s$charges$are$far$more$sweeping$and$involve$many$more$people.$“This$is,$in$my$mind,$the$biggest$thing$we’ve$ever$done,”$said$Lisa$Brummel,$a$24Zyear$Microsoft$veteran$who$leads$its$human$resources$department,$noting$that$the$company$has$nearly$100,000$employees.$$It$remains$to$be$seen$whether$more$cohesive$teamwork,$if$that$is$what$results$from$all$the$movement,$will$offer$the$spark$that$has$been$missing$recently$from$so$many$of$Microsoft’s$products.$The$company$remains$one$of$the$most$lucrative$enterprises$on$the$planet,$with$nearly$$17$billion$in$profit$during$its$last$fiscal$year$on$$73.7$billion$in$revenue.$But$it$has$been$widely$faulted$for$being$late$with$compelling$products$in$two$lucrative$categories,$smartphones$and$tablets.$Its$Bing$search$engine$is$a$distant$second$to$Google$and$loses$billions$of$dollars$a$year$for$Microsoft.$$Rivalries$among$the$Microsoft$divisions$have$built$up$over$time,$sometimes$resulting$in$needless$duplication$of$efforts.$Microsoft$managers$often$grumble$privately$that$one$of$the$most$dreaded$ circumstances$at$the$company$is$having$to$“take$a$dependency”$on$another$group$for$a$piece$of$software,$placing$them$at$the$mercy$of$someone$else’s$development$schedule.$$Product$development$groups$will$sometimes$go$to$great$lengths$to$avoid$this,$creating$software$like$eZmail$programs$that$duplicate$the$functions$of$other$products$at$Microsoft.$While$its$old$divisions$all$had$their$own$finance$and$marketing$organizations,$Microsoft$is$now$centralizing$those$functions.$$Bill$Whyman,$an$analyst$at$the$ISI$Group,$said$Microsoft’s$promise$to$make$all$of$its$technologies$work$better$together$would$be$challenging$given$the$sheer$breadth$of$its$product$portfolio,$which$covers$corporate$and$consumer$products.$$“That$sounds$right$but$it’s$really,$really$hard$to$do,”$Mr.$Whyman$said.$“Maybe$Apple$does$it$with$the$iPhone$ecosystem.$Microsoft$is$proposing$to$do$it$over$a$much$broader$set$of$customer$applications$and$uses.”$$Amazon$has$already$been$trying.$It$has$become$a$major$player$in$devices,$with$its$Kindle$family$of$eZreaders$and$tablets.$Google$tiptoed$into$hardware$production$with$products$like$the$Chromebook$Pixel$laptop$and$Google$Glass,$as$well$as$the$failed$Nexus$Q$for$streaming$media.$And$Google’s$boldest$and$riskiest$move$in$hardware$was$spending$$12.5$billion$to$buy$Motorola$Mobility.$$The$focus$on$the$full$suite$of$offerings$has$led$several$companies$to$rethink$how$they$are$organized.$When$Larry$Page,$Google$coZfounder,$took$over$as$chief$executive$in$2011,$he$shook$things$up$at$the$search$company,$whose$structure$had$become$bloated$and$labyrinthine.$To$help$the$company$move$faster,$Mr.$Page$centralized$decisionZmaking$power$with$him,$eliminating$Google’s$former$triumvirate$of$equal$decision$makers$at$the$top.$$Michael$A.$Cusumano,$a$professor$at$the$Sloan$School$of$Management$at$the$Massachusetts$Institute$of$Technology,$said$revamping$an$organization’s$structure$tended$to$provide$only$temporary$remedies.$$“I$never$take$these$reorganizations$too$seriously,”$said$Mr.$Cusumano.$“Almost$any$reorganization$is$designed$to$solve$current$problems$people$see.$Over$time,$other$problems$come$up.”$$Perhaps$the$most$pressing$issue$facing$Microsoft$now$is$the$decline$of$personal$computers.$Most$of$the$company’s$revenue$rests$on$the$personal$computer$business,$in$one$form$or$another,$and$that$market$is$mired$in$a$brutal$slump$—$one$that$Windows$8,$the$new$tabletZfriendly$operating$system$Microsoft$released$last$year,$failed$to$reverse.$This$week,$Gartner,$the$research$firm,$said$secondZquarter$PC$shipments$fell$10.9$percent$from$a$year$before.$$“This$organization$does$not$answer$the$following$question:$What$happens$to$Microsoft$if$PC$shipments$continue$to$go$down?”$asked$JeanZLouis$Gassée,$a$venture$capitalist$and$former$Apple$executive,$referring$to$Microsoft’s$new$structure.$$Other$maturing$technology$companies$have$successfully$responded$to$challenges$in$their$businesses.$In$2004,$I.B.M.$made$a$pivotal$decision$to$exit$the$personal$computer$business$to$focus$on$corporate$technology$services.$With$its$revamping,$Microsoft$did$not$announce$plans$to$leave$any$businesses.$$One$of$Microsoft’s$biggest$changes$is$the$creation$of$the$devices$and$studio$group,$headed$by$Julie$LarsonZGreen,$which$will$oversee$the$development$of$Xbox$hardware,$the$Surface$family$of$tablet$computers,$hardware$accessories$and$games.$$Mr.$Ballmer$did$not$say$what$other$devices$Microsoft$might$make$in$the$future,$but$he$hinted$in$an$interview$conducted$over$Skype$that$Microsoft$could$play$a$role$in$the$development$of$technologies$that$make$videoconferencing$feel$more$natural,$allowing$participants$to$make$eye$contact.$$“It$takes$evolution$in$the$physical$form$factors.$It$takes$evolution$in$the$software,$in$the$services,”$Mr.$Ballmer$said.$$Qi$Lu,$the$head$of$Bing$and$Microsoft’s$other$Internet$initiatives,$will$take$over$a$new$applications$group$and$oversee$the$company’s$lucrative$Office$franchise$and$Skype.$Satya$Nadella,$as$the$head$of$the$new$cloud$and$enterprise$group,$will$manage$the$network$of$data$centers$that$power$all$of$Microsoft’s$online$services,$in$addition$to$Windows$Azure,$the$cloud$service$he$has$been$running$for$some$time.$$ “It’s$not$like$our$old$structure$didn’t$allow$us$to$do$some$of$this,”$Mr.$Nadella$said.$“The$question$is$whether$you$can$amplify.”$$ClaireBCainBMillerBcontributedBreportingBfromBSanBFrancisco.B$