Rumored Microsoft reorg would put consumer leaders in charge

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If last night’s Bloomberg report detailing an impending restructuring at Microsoft proves true, the consumerization trend is having a big impact on the company.

Citing unnamed sources, Bloomberg describes a reorganization that will reduce the number of divisions at the company to create a few large and overreaching groups including hardware, engineering, marketing and finance. Microsoft isn’t commenting on the report.

One of the most interesting possibilities is the roles that some of the leaders of Microsoft’s consumer businesses would take in the restructuring.

“Ultimately the guys who have made the big bets in the consumer space are now going to get the chance to do the same thing on the business side,” said Rob Helm, an analyst at Directions on Microsoft, who based his comments on the Bloomberg report and not insider knowledge.

He’s talking about new roles reported for both Qi Lu, currently responsible for Microsoft’s online group, including its relationship with Yahoo, and Terry Myerson, who now heads Windows Phone and thus Microsoft’s partnership with Nokia.

Bloomberg reports that Lu would be in charge of an applications and services engineering unit that would include Office, while Myerson would get the combined Windows and Windows Phone group.

“It’s very interesting that these two consumer leaders will be in charge of the two largest enterprise-facing businesses at Microsoft,” Helm noted. Particularly so because both executives will get expanded responsibilities despite having overseen services and products that have struggled. “Each have made some headway on market share but they still have a tiny fraction of their target markets,” said.

Still, Microsoft could be hoping that the executives can bring their experiences in consumer markets to its flagship enterprise businesses which need to capture the consumerization trend or they’ll lose relevance.

Another head of a consumer business – Tony Bates, who runs Skype – would take charge of acquisitions and relationships with software developers, Bloomberg reports. Bates has been a rising star at Microsoft since the acquisition of Skype, where he was CEO. Prior to Skype, Bates oversaw strategy and development at Cisco. Analyst Helm said the new role struck him as being vague. Still, it’s yet another example of a head of a consumer product taking on more responsibility within Microsoft.

Currently, Microsoft reports financial results in five segments that don't exactly match its current organization. But if the company changes its financial reporting to the new reorganization, it would be a challenge to follow how well it’s doing in individual product lines, since they’d be lumped together under hardware and services. 

“Bigger buckets means potentially less accountability,” Helm said. “For example, lumping consumer-oriented online services together with business oriented online services is going to bury the results of both to a certain extent.” 

The Bloomberg report and others predicting an impending restructuring say that all aspects could still change. They also haven’t predicted when an announcement about any changes might happen. Microsoft’s Worldwide Partner Conference kicks off in a few days and the company might feel it should share the changes with partners, Helm said. It could also wait until July 18 when it reports earnings for the last quarter of its 2013 fiscal year.

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