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Microsoft on Tuesday responded to concerns that its size was hampering its ability to compete with more nimble rivals, by announcing it would overhaul its business divisions, each with its own president.

?These changes are designed to align our business groups in a way that will enhance decision-making and speed of execution,? said Steve Ballmer, chief executive. The reorganisation, designed to help it make ?fewer decisions faster?, collapses Microsoft's seven business units. It follows criticism it has become too bureaucratic, as well as embarrassment over delays in the release of Vista, the newest version of the Window's operating system.

Microsoft's platform products & services division, which will combine its Windows desktop operating system, server software and MSN online service, will be run by Kevin Johnson and Jim Allchin as co-presidents. Jeff Raikes was named president of the business division, which will include Microsoft Office and server software, while Robbie Bach was appointed president of the entertainment & devices unit, which will include the group's Xbox game console.

Ray Ozzie, who joined the company this year following the acquisition of Groove Networks, a company he founded, would expand his role as chief technology officer. Analysts noted that the power of companies such as Google and eBay pointed to a world in which more functions will be accessed over the internet. This is a challenge to Microsoft's business model, based on sales of software to be installed on PCs.

Microsoft argued the realignment was the best way to take advantage of the opportunities it faced and rejected the notion the move was in response to competition from Google.

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