Microsoft's reorganization into a more streamlined business could affect enterprise IT shops as they make strategic technology decisions surrounding Windows, devices and services deployments.
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The company's plans to consolidate its engineering operations and reposition itself as a device and services company were disclosed this week.
Under Microsoft's new engineering leadership, Terry Myerson will oversee the Operating Systems Engineering Group, representing a key role for the company as it delivers on promises to have Windows work across different devices and form factors. Julie Larson-Green was named as the head of the Devices and Studios Engineering Group.
The consolidation of the company -- now organized by function -- was a long time coming and could represent one of CEO Steve Ballmer's biggest executive decisions in his career.
"The good news is that all the OSes are in one place," said Bob O'Donnell, program vice president for client and display research at research firm IDC in Framingham, Mass. "This is something that should have happened a long time ago."
But restructuring the engineering teams by group also calls for Microsoft's teams to collaborate with one another.
"This is a critical risk with Windows' annual release," said Rob Helm, managing vice president of Directions on Microsoft, a Kirkland, Wash.-based IT analysis firm. "So much depends on Windows, and it could have a huge ripple effect unless [Microsoft is] coordinating with the cloud services and hardware groups.
"On the flip side, the applications groups will need to move faster if they want to take advantage of new capabilities for Windows. They need a clear roadmap from the Windows group," he added.
But Microsoft's goal to support the pace of delivering technology at a faster cadence is of concern for IT administrators who must keep up with a faster rate of change.
"Accelerating the pace of product releases across their ecosystem is probably giving a lot of IT people a queasy feeling, but our world is changing, so we better get used to it," said Scott Ladewig, manager of networking and operations at Washington University in St. Louis. "I'm glad to see Microsoft getting out in front, when in the past they may have lagged a bit."
From software giant to a devices and services company?
It remains to be seen whether the Microsoft reorganization and its move to reposition itself as a devices and services company will succeed. Microsoft is not known for providing hardware, except for its Xbox gaming console and the recently released Surface tablets.
"Other than Xbox, they don't have a tremendous track record when it comes to hardware," O'Donnell said. "It's surprising to me [that] they would do that."
And, some say Microsoft should stick with what it knows.
"The best Microsoft can do is come up with a hybrid laptop-tablet," said Mike Drips, a Houston-based veteran IT professional specializing in Microsoft platforms. "They don't sink enough money into design, and that is where Apple is gaining traction because their stuff is slick. Microsoft is the same old, same old. They are even getting beaten up on the new Xbox."
On the other hand, Microsoft could now be gunning not for a reputation as a device company, but rather for one as a vendor that works with partners to provide devices and also provide its own.
"Building upon Windows, Xbox and our growing suite of consumer and enterprise services, we will design, create and deliver, through us and through third parties, a complete family of Windows-powered devices -- devices that can help people just as much in their work life as they do after hours," Ballmer wrote in a memo published on Microsoft's website.
Despite Microsoft's message, the company has in recent months pushed hard to get Surface and Windows 8 into more organizations. To date, Microsoft has added enterprise features into Windows 8.1 and developed a commercial channel program for the Surface.
"I think this puts ... the idea that the Surface was a 'warning shot' to other OEMs," said Jonathan Hassell, president of 82 Ventures and a SearchWindowsServer contributor. "Microsoft is in the device market to stay now, and I think with Julie Larson-Green leading up that charge, it will certainly be more than just the Xbox."
Over the long term, the key to Microsoft's success may lie in its attention to cloud services. Analysts say Microsoft is well-positioned to become the primary login point.
"Who will own the digital persona? Ultimately, you can log into someone's system, and that will take you into everything you want," said IDC's O'Donnell. "Microsoft is better positioned, and they can be the ones. ... Given their infrastructure and established reputation, they are well-positioned for something like that."
SkyDrive is a good example of the potential for Microsoft as a service provider.
"[SkyDrive] is a service that ideally you'd like it to work invisibly across all devices," Helm said. "[Microsoft] can make it happen if [they] have end-to-end control of devices and services. This is part of the reason Microsoft had to poke its nose into the device market. This is the only way it can achieve the end-to-end control."
Senior executive editor Ed Scannell, news writer James Furbush and associate site editor Jeremy Stanley contributed to this story.