Microsoft shuffles, cuts its divisions

CEO restructures units around hardware and Internet services

SEATTLE Microsoft Corp., playing catch-up in mobile computing, is reorganizing into fewer units and shuffling senior management roles to speed development of hardware and web-based services.

Windows chief Julie Larson-Green will shift to oversee all hardware including the Surface tablet and Xbox console and related games, while Windows phone software head Terry Myerson will now lead development for that area as well as Windows and Xbox operating system, the company said Thursday in a statement.

CEO Steve Ballmer is restructuring divisions around hardware and Internet services as customers increasingly use mobile devices for tasks once completed on desktop machines, curbing demand for the company’s flagship Windows operating system. He’s also separating corporate tasks such as marketing and finance from engineering to help executives focus on building products.

“To advance our strategy and execute more quickly, more efficiently, and with greater excellence we need to transform how we organize, how we plan and how we work,” Ballmer said.

The shuffle, which pares the number of engineering units to four from eight, reverses some changes Ballmer made in 2002 when he divided Redmond, Wash. -based Microsoft into what was then seven individual product units, each led by an executive with operational and financial responsibilities.

Market research firms IDC and Gartner Inc. said yesterday that PC shipments slumped around 11 per cent in the second quarter, the fifth straight quarter that PC shipments have dropped. Among the other management changes, Skype president Tony Bates will run a new group for business development and acquisitions and cultivate relationships with developers and computer makers.

Qi Lu, chief of the online group, will run a unit made up of the Bing search service, Office and Skype. Satya Nadella, current head of the server business, will direct cloud and enterprise products.

Tami Reller, who now leads Windows marketing, will oversee a marketing unit. The finance heads for each division will report to Amy Hood, Microsoft’s chief financial officer. Previously the CFOs in each unit reported to the head of their respective businesses.

Kurt DelBene, who ran the Office division, is retiring.

Xbox head Don Mattrick had been a contender for the hardware post before he left the company to become CEO of Zynga Inc., a move announced July 1