FORTUNE -- Now that Microsoft's long-rumored reorganization is here, the question becomes whether the massive changes are enough to achieve CEO Steve Ballmer's vision of "one Microsoft."
Under the restructuring, teams within the Redmond, Wash.-based tech giant will focus their efforts on operating systems, apps, the cloud, and devices but also contribute to all of the company's core products, from Windows to Xbox. Several top executives also benefit. Julie Larson Green, the former head of the Windows division, will now serve as hardware chief -- a role occupied recently by Don Mattrick, now Zynga (ZNGA) CEO -- with Windows Phone VP Terry Myerson running the Windows group. Others like Satya Nadella will now spearhead the company's cloud services, and Skype president Tony Bates will manage the Business Development and Evangelism group, leading corporate strategy and developer outreach. In doing so, it's not just Ballmer's aim for Microsoft (MSFT) to become the "devices and services" company he promised last fall but to also encourage unprecedented collaboration across the company.
"The most important thing for a large company is to be able to coordinate resources across a whole bunch of different domains to get something done, and that's what Microsoft is attempting to do," explains Forrester (FORR) analyst David Johnson, who argues that Microsoft has embraced and rewarded good leaders internally with the move. He points to Nadella in particular as one example. As president of Microsoft's Server and Tools previously, Nadella led a $19 billion-a-year division that saw sales climb 11% during the company's most recent quarter. (Before that, he also ran the Bing search group as well as the advertising business.)
"It's a great first step but won't get them to 'One Microsoft,'" says Randy Ottinger, EVP of the executive leadership strategy firm Kotter International. "The real question is what are they going to do post-reorganization to actually change the culture. The reorg will not change the way they behave and act because it's been years and years of doing business in a different way."
Ottinger is referring to Microsoft's notorious "forced ranking" system which mandates that every unit declare a certain percentage of employees as top performers, good performers, average, and poor. According to a revealing Vanity Fair company profile last summer, it's a program that has bred a survival-of-the-fittest mentality among many employees and ultimately slowed Microsoft down. (To wit, one software engineer recalled employees spending much of their time planning for their six-month reviews instead of focusing on product development.)
"It's a cancer for innovation," agrees Johnson, who expressed surprise that COO Kevin Turner, the executive behind forced ranking, kept his role after the shuffle. "When employees know that someone on their team is going to take a bullet every year regardless, competition between people is a natural result. I think it fosters the wrong behavior within the company but Steve obviously still sees some value within that."
The Mountain View, Calif. startup is offering a cloud-based product that unites groups of users of several different videoconferencing services.
FORTUNE -- Videoconferencing has become (almost) mainstream, but there are still plenty of challenges getting different technologies like Cisco's (CSCO) TelePresence and Skype to work together. In industry-speak, that's called interoperability -- or lack thereof.
Enter Blue Jeans Network, a Mountain View, Calif.-based startup that says it's found a solution to the MOREMichal Lev-Ram, writer - Mar 21, 2012 9:00 AM ET
Tony Bates, CEO of Skype, discussed his company's acquisition by Microsoft with Silver Lake managing director Egon Durban, Andreessen Horowitz co-founder Ben Horowitz and Fortune's Adam Lashinsky.
Below is an unedited transcript from the interview. For more, see Dan Primack's story Skype CEO checked his list.
ADAM LASHINSKY: We have in the Skype story a story that has everything that excites us at Fortune magazine, and you in our audience. We have MOREJul 21, 2011 3:17 PM ET
For Tony Bates, joining Skype was a "no brainer."
By Dan Primack, senior editor
FORTUNE -- Every year, Tony Bates and his wife make a list of future goals. In 2007, Bates was a 40-year-old Cisco (CSCO) executive who wrote down that he wanted to become a CEO by the age of 45. He then listed four companies -- all consumer-focused, despite his enterprise pedigree -- that he hoped would offer him MOREDan Primack - Jul 21, 2011 2:03 PM ET
How executive shuffles, product changes, and a delayed IPO paid off for a couple of private equity firms.
By Kevin Maney, contributor
FORTUNE -- In September 2009, Silver Lake Partners and venture firm Andreessen-Horowitz bought Skype from eBay, where it had become the Kurt Cobain of technology companies (wildly popular, deeply troubled). The value of that deal: $2.75 billion.
In May 2011 the new owners announced that they were selling the company to MOREJul 12, 2011 5:00 AM ET
Signs of exuberance are everywhere: Tesla roadsters, soaring real estate, overpriced vinegar - and eye-popping valuations for pre-IPO companies like Facebook and Zynga. So why are so many Silicon Valley denizens reluctant to use the B-word?
By David A. Kaplan, contributor
FORTUNE -- Michael Dreyfus, 49, is a leading real estate broker in the heart of Silicon Valley. During the winter he sensed the housing market was coming back, though he hadn't MOREJul 11, 2011 5:00 AM ET
Why Facebook's new Skype-powered video chat feature shows Google has what it takes to build competitive social apps. And that Facebook may have a social rival in Google.
FORTUNE -- At Facebook's launch event Wednesday, the social network unveiled three products, including group messaging, a new full-sized buddy list design and video chat. While all are welcome additions, it was that last feature that fueled rumors for weeks. Now that it's MOREJP Mangalindan, Writer - Jul 6, 2011 6:22 PM ET
Startup Fansnap is trying to bring the events business to Facebook, betting a social layer will help teams and rockstars fill seats.
FORTUNE -- I heard a new expression today: F-commerce. The "F" is for Facebook, and it refers to transactions that happen in that alternative universe that isn't merely the web, isn't specifically mobile and most definitely is not a physical store. Rather, it's commerce on that friendly service that MOREAdam Lashinsky, Sr. Editor at Large - Jun 22, 2011 11:09 AM ET
Fortune's curated selection of the weekend's most newsworthy tech stories from all over the Web. Sign up to get the newsletter delivered to you everyday.
"If you invent frequently and are willing to fail, then you never get to that point where you really need to bet the whole company." - Jeff Bezos, Amazon CEO (GeekWire)
* Bloomberg reports that Skype fired several high-ranking executives -- including vice presidents David Gurle, Christopher Dean, Russ Shaw, MOREJP Mangalindan, Writer - Jun 20, 2011 6:30 AM ET
The company has been the ultimate under-the-radar survivor, changing hands, taking on debt, and preparing to go public, only to find a white knight in Microsoft.
By Dan Mitchell, contributor
FORTUNE -- Given the premium price Microsoft is paying for Skype, it's striking that the Internet phone company has spent so much of its short life being passed around like a cheap bottle of holiday wine. Also striking is the eye-popping level MOREMay 11, 2011 5:59 PM ET
|2 million Facebook, Gmail and Twitter passwords stolen in massive hack|
|Job growth drives mortgage rate jump|
|Investors brace for big dip in stocks|
|Ron Paul: Bitcoin could 'destroy the dollar'|
|GM to discontinue Chevrolet brand in Europe|