The Herald Bulletin

Morning Update

Nation & World

July 11, 2013

Microsoft reshuffles company structure

NEW YORK — Microsoft Corp. is reshuffling its business in an attempt to promote faster innovation and a sharper focus on devices and services. The move by the world's largest software maker comes amid lukewarm response to the latest version of its flagship Windows operating system and a steady decline in demand for PCs as people turn to tablets and other mobile gadgets.

CEO Steve Ballmer said in a memo to employees Thursday that the changes mean the company is "rallying behind a single strategy" and organizing by function. While it has been widely anticipated, it's too early to tell how well the reorganization will help Microsoft compete with more nimble rivals like Apple and Google.

"You don't make massive, sweeping changes like this unless something is wrong," said Colin Gillis, an analyst at BGC Financial, pointing to Wednesday's reports of declining PC shipments around the world.

Worldwide shipments of personal computers fell 11 percent in the April-June period, according to data from research firms Gartner and IDC. Gartner Inc. said the PC industry is now experiencing the longest decline in its history, as shipments dropped for the fifth consecutive quarter. Analysts have blamed a massive consumer migration to tablets and other mobile devices for the falloff. But many observers also believe Microsoft's Windows 8 operating system —which comes installed on most new PCs— has turned consumers off.

The company's new divisions include engineering, marketing and business development. Microsoft named veteran executive Julie Larson-Green head of its devices and studios engineering group, overseeing hardware development, games, music and entertainment. She had been promoted in November to lead all Windows software and hardware engineering after Steven Sinofsky, the president of its Windows and Windows Live operations, left the company shortly after the launch of Windows 8.

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