Steve Ballmer tightens his grip on Microsoft with major revamp

Reorganisation reinforces Chief Executive Steve Ballmer's grip on company's direction

PUBLISHED : Friday, 12 July, 2013, 11:13am
UPDATED : Saturday, 13 July, 2013, 2:20am

Microsoft's sweeping re-organisation on Thursday creates a company that, more than ever, bears the stamp of chief executive Steve Ballmer.

The face of Microsoft since he took the reins from Bill Gates in 2000, Ballmer stressed the importance of improving internal collaboration and eliminating redundancies when he released the company's new organisational blueprint.

But some analysts say the changes also mean less leeway for Microsoft's individual businesses to set and pursue their own agendas, as the company imposes a more streamlined, top-down approach to its strategy and operations.

For all the changes promised, the move reinforces Ballmer's grip on the company's direction and further muddies the succession picture.

"There's still no heir apparent or any succession strategy that has become apparent," said David Smith, an analyst with industry research firm Gartner. "It sounds like he wants to run it in a more centralised style."

That Ballmer, 57, who presided over a decade of share price stagnation and was deemed slow to respond to mobile computing, remains more entrenched may worry investors and spur concern about whether the reorganisation will truly effect change.

Microsoft is the world's No1 software company, whose US$74 billion in annual revenue is powered largely by its dominant role in the PC business via its flagship Windows and Office software. But the company has been caught flat-footed by new trends such as mobile computing, where software by Google and Apple lead the pack, as well as by web-based "cloud" services.

Rob Helms, an analyst with consulting firm Directions, said: "What this re-organisation has done is taken away a lot of functions in principle from people who were reporting directly to Steve Ballmer."

That makes the post-Ballmer succession plan, long a concern among investors, even less clear. Under the previous structure, comprised of mini-business units, Helms said "there was a job short of the CEO's chair that was very much like a CEO".

"So if you wanted to develop your career, the skills and the credibility to be Microsoft's next CEO there was a place to land," he said. "Now there really isn't."

Development of Windows will now be folded into one group headed by Terry Myerson, who was previously in charge of Windows Phone but now has responsibility for tailoring the flagship operating software for devices ranging from the traditional PC to tablets and gaming consoles.

Julie Larson-Green, previously co-chief of the main Windows division, will oversee a new division charged with responsibility for all hardware devices, from the Surface tablet to the Xbox.

The moves realign the company into what Ballmer calls a "devices and services" corporation.

Meanwhile, Microsoft's stronghold of providing software for PCs is under threat, analysts say, as consumers and corporations turn to mobile devices, such as smartphones and tablets, and to web-based software.