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Will Microsoft’s reorganization work?

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It’s been more than three decades since Bill Gates laid out his vision for Microsoft to put a PC on every desk in every home.

That was then. These days it’s all about the cloud, and mobile devices like smart phones and tablets.

So the world’s largest software company announced big changes Thursday.

Microsoft employees woke up to a long email — about 2,700 words — from CEO Steve Ballmer outlining a new strategy he’s calling “One Microsoft.” (If that sounds familiar, think Detroit. Ford CEO Alan Mulally dubbed the auto maker’s turnaround “One Ford” in 2006. He’s been advising Ballmer.)

Ballmer’s bottom line: Microsoft needs to be more nimble and collaborative.

“If you want to pivot the organization, then those are all the right words to be using,” says Jay Vleeschhouwer, a software analyst at Griffin Securities.

“Their observation of what’s going on in the world is that corporations and consumers are changing the way they interact and use technology,” he adds.

Especially handheld devices, and Microsoft is falling behind competitors like Apple and Google. 

So instead of separate divisions for each product, the company is reorganizing by function. Among them are marketing, strategy and new engineering teams for devices and the cloud.

“Microsoft is essentially admitting in this reorganization that the fragmentation of their products and their strategy has failed,” says John Furrier, editor-in-chief of Silicon Angle. “He’s been under pressure to perform…and it’s clear from this reorganization, this is Steve Ballmer’s last stand.”

Microsoft says there won’t be layoffs, but it’s moving top executives around. Longtime Microsoft analyst Rick Sherlund, at Nomura Securities, says Ballmer’s strategy is long on rhetoric, but short on specifics.

“It doesn’t quite address the concern that investors have, which is, where are you in smart phones and where are you in tablets?” Sherlund says.  “It’s a good structural change, but it kinda doesn’t solve the problem that you have currently.”

Ballmer says there’s still a lot to do. His closing words to employees: “Let’s go.”

But perhaps not until they read his other memo of the morning — an even longer 3,100-word elaboration on the corporate changes.  

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