Three big takeaways from the Microsoft reorg

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Microsoft’s rumored reorg was officially announced today. Perhaps more interesting than the executive moves are the underlying themes that Microsoft unveiled in a couple of memos. The company is clearly focused on consumerization, has big plans for devices, and high hopes for its ability to deliver something unique.

Here’s what you need to know:

Microsoft is embracing consumerization. Although Microsoft represents the epitome of traditional enterprise software, it knows it needs to be part of the consumerization wave that has rapidly altered the way businesses acquire software. Gone are the days when central IT makes a huge investment in a new software product, spends a year implementing it, and then foists it on users.

In today’s “Transforming our company” memo, Microsoft laid it right out: “Our new strategy will put us right at the intersection of the consumerization of IT and the evolving needs of the enterprise customer, delivering the devices that employees want and the productivity, security and control that IT managers need.”

It sounds like the company plans to try a bunch of strategies for riding the consumerization in the enterprise wave. In addition to building new products for IT professionals and developers, the company plans to empower “people to be more productive independent of their enterprise.” That sounds like an effort to let workers adopt new Microsoft products and services without relying on IT.

That will be tough for Microsoft primarily for many of its software products – it’s not like employees are likely to choose Office 365 on their own. It surely thinks it has a better chance of getting employees to choose Microsoft-based phones and tablets, although it hasn’t exactly had runaway success with Windows Phone or tablet sales so far.

Microsoft has big hardware aspirations. Surface isn’t the end of the story (although the company hinted that new generation Surface tablets are on the way, during this week's Worldwide Partner Conference).

In the “Transforming” memo, the company made reference to “first-party devices” a number of times. “Our family will include a full spectrum of both partner and first-party devices,” it said, including phones, tablets, PCs, 2-in-1s, TV-attached devices and “other devices to be imagined and developed.”

Twice it also mentioned wearables, although not necessarily with hardware made by Microsoft. “We have a platform that is adaptable to every screen — big, small, mobile, institutional, personal and even wearable…”

There has been speculation that Microsoft is working on a phone of its own and that it might be making another stab at a smart watch. The memo makes it easy to believe those rumors.

Microsoft has blinders on about the competition. The “Transforming” memo as well as the Steve Ballmer memo to employees outlining the reorganization stress Microsoft’s unique potential to offer a full range of devices and services useful to people all day at work and at home.

“No other company has such strength across so many categories today,” Microsoft wrote in the “Transforming” memo, apparently forgetting about Google and to a lesser degree Apple.

Microsoft is still a dominant player in the enterprise but it falls far short in the consumer world. That puts it in just the opposite position as Google, with its number one Android phone platform. Google, too, hopes to deliver a range of devices – phones, Chromebooks, smart TVs – that run on a whole host of cloud services. And with Google Apps and Google Compute Engine, the company is making headway in the enterprise.

Apple has the dominant position in the enterprise with tablets and smartphones but lacks the cloud services components that Microsoft and Google have. But it has a huge position in the consumer and enterprise markets that Microsoft will have a hard time dismantling, even if it has a wider breadth of services.

Reorgs in huge companies like Microsoft don't always yield much, and in the short term it could prove a distraction to workers. But you can't blame Ballmer and company for using the opportunity to clearly outline the company's focus and try to rally the troops in the face of a changed market.

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