Microsoft’s Devices-and-Services Era Begins Today

The world's biggest software company says goodbye to the software era.

  • Share
  • Read Later

Microsoft's staff in 1978, when it could fit in one photo and was presumably comparatively easy to organize

I don’t claim to be an expert on Microsoft’s personalities, politics and corporate structure. So I’m not particularly well equipped to say anything brilliant about the company’s massive reorganization, which turned from rumor to reality today. (Here’s Steve Ballmer’s memo to the staff, which Microsoft simply published as a public statement, too.)

But the overarching goal of the reorganization is fascinating food for thought. Here’s Ballmer:

Going forward, our strategy will focus on creating a family of devices and services for individuals and businesses that empower people around the globe at home, at work and on the go, for the activities they value most.

We will do this by leveraging our strengths. We have powered devices for many years through Windows PCs and Xbox. We have delivered high-value experiences through Office and other apps. And, we have enabled enterprise value through products like Windows Server and Exchange. The form of delivery shifts to a broader set of devices and services versus packaged software. The frontier of high-value scenarios we enable will march outward, but we have strengths and proven capabilities on which we will draw.

And here’s a snippet from another Microsoft statement about the news — obviously by Ballmer, though I don’t see a byline:

No technology company has as yet delivered a definitive family of devices useful all day for work and for play, connected with every bit of a person’s information available through one cloud. We see tremendous room for innovation in software, services and hardware to bring the consumer this new, more complete and enveloping experience.

Our family will include a full spectrum of both partner and first-party devices. We believe we need all of these categories to drive innovation, fulfill market desire for diversity of experience, and achieve volume.

Our family will include phones, tablets, PCs, 2-in-1s, TV-attached devices and other devices to be imagined and developed. No other company has such strength across so many categories today, and yet this strength is essential to being relevant and personal throughout people’s lives. Our devices must share a common user-interface approach tailored to each hardware form factor. They must deliver experiences based on a common set of services such as the same account login or a common understanding of people and their relationships. They need to share the same services infrastructure so that the information an individual has shared on one device can be available and carry across all the devices in the family. Our devices must support the same high-value activities in ways that are meaningful across different device types. Developers must be able to target all our devices with a common programming model that makes it easy to target more than one device.

Got it? Microsoft wants to be organized in a fashion that puts devices first — they’re mentioned before services, and poor old traditional software isn’t even explicitly addressed in the new corporate mantra.

The company mentions that the devices in question will include both “partner and first-party” products, which means that some of them will be from other manufacturers and some, like Xbox One and Surface, will be offered by Microsoft itself. There’s lot of detail about the new vision in these two Microsoft memos, but the company isn’t spelling out how many of these devices will be from partners and how many will be from Microsoft. It seems a given, though, that the company sees itself as doing more of its own devices in the future rather than fewer of them.

However Microsoft goes about reinventing itself, it’s not dumbing things down too much to divide its 38-year history into two eras:

  • The age of packaged PC software, when Microsoft was fabulously successful and focused on keeping it that way — and was simultaneously aggressive about attacking other companies’ turf while (usually) pretty conservative about its management of its major products;
  • The age of devices and services, in which Microsoft, huge though it still is, is very much an underdog. In this era, Microsoft has been willing to make big bets. It’s ripped up Windows Mobile and Windows itself and started from scratch, and risked ticking off its most important customers by getting into the PC business with Surface. And it’s building stuff which — whatever you think of it and its chances at success — is less stolid and more interesting than Microsoft products have been in years.

You can identify some Microsoft successes in this second era — especially Xbox — but it remains an enormous gamble that hasn’t yet paid off, and which must succeed if Microsoft wants to continue to be one of the tech companies that defines the tech industry. The company isn’t pulling back, though: With the reorganization, it’s doubling down on the idea.

So even if you don’t care who’s running what inside Microsoft, you do care — at least if you have any interest in the device-and-service vision it’s outlining, and haven’t written off the company’s chances. The reorg is about a third era of Microsoft history, one which hasn’t started yet and which will only matter if its devices, services — and, yes, software — are a substantial advance on anything it’s doing right now.


Microsoft is telling the world that they will not only do software but devices. Microsoft will use its vast software resources and add them expertly to hardware components. It makes a lot of sense because computerized devices are flourishing. Low priced computers powered by Windows 8 are now flooding the market.


I can not see how reorganizing who reports to who is going to make any difference at Microsoft. The engineers are still the same. The person who the engineer reports to is still the same so the levels above that can't make a difference in the short term or less than 5 years. Microsoft doesn't have 5 years. Microsoft was selling for $60 / share when Bill Gates was at the helm. Either get Bill Gates back or loose Ballmer. Reorganizing the furniture in his office is not going to do anything. 


@TzymotraklimJorkzinw You're right and wrong at the same time. It's not that big a deal because people get shuffled all the time. Losing Sinofsky was a major change at the top, you could call that a mini-reorg. The loss of Jay Allard and other important execs some time ago also resulted in some pretty major shifts. People don't realize that big companies like MS and Apple undergo reorgs all the time. They just don't publicize it. 

As far as the engineers, they may be the same people, but their responsibilities usually change and the team dynamic also changes. A lot of this stuff can get personal and if you don't like your new boss, or your boss doesn't like you, it could have big consequences.

Apple underwent a major organizational change when they fired Forstall and put Jony Ive in charge of both hardware design, software design, and human interface. Sure, on paper they just added a couple titles to Ive's list which doesn't sound like much, but it's a whole other ball game to run the whole shebang and we're just seeing the fruits now with the release of iOS 7.


The "reorganization" didn't get rid of the problem - forgetting that they have customers who use their products ALREADY.  They're looking to get NEW ones.

Talk about playing AGAINST their strengths.  They ALREADY have three BILLION PC users out there (give or take).  And instead of making sure their core customer base is covered, they not only threw them them under the bus, they drove the bus over them in their haste to get into a market that is already reaching saturation and in which the Microsoft brand is not only a laughing stock, it's dead last in "expanding" markets.  Maybe they don't get it that the ship has sailed there for them.  They didn't bother getting into the markets when the markets were good and now, even Apple products aren't selling in the face of better Android products (See the stories about how Verizon is in the hole for $14 billion in "promised" Apple iPhone sales).

Microsoft has had absolutely no success in getting its brand out there.  It was a joke when Symbian was big.  And it's a joke today.  But they're focusing on the joke and ignoring their vast base, so in the end, the joke will be on them.

Ballmer needed to go.  And it was everyone but him going.  Well, like I said, the joke is on them.  They're catering to shareholders and chasing increasingly rare marketing poll butterflies instead of actually doing what a company needs to do: Take care of their core customers. Guess after my new Win 7 computer dies, I'll be making the jump to Linux.  I have the feeling this new push by Microsoft will be the best thing that has ever happened to Linux in computer history.


@DeweySayenoff "Microsoft has had absolutely no success in getting its brand out there." 

Do you have any numbers to back you up? MS was the 7th most valuable company as of end of March 2013. And you admitted you use Win 7 so apparently they had success in getting their brand onto your desktop. Xbox also continues to sell well. MS is doing significantly better than you give credit for. Ya, their mobile efforts haven't been great, but who needs to sell tablets or smart phones when you have a monopoly on the desktop?

LanceCole 3 Like

Ford entered into making Jeeps at one time, they've made cars, trucks, and more. The one thing they never did, which made them famous, was abandon the assembly line or the 'well-paid-worker' concept. Ford's company made automobiles, but their core proficiency was, and still is, the assembly line and the people, which made that possible. Microsoft would do well to remember that subtle lesson, before they might blindly cut their own throat, due to erroneous advisors and market surveys. Deep profit pools can be oceans in size, or just narrow ponds. Normally when you go to jump into what you think is a deep profit pool, you only do so if you are the first one there, not when it looks like Coney Island on July 4th. I foresee a great expenditure of capital on Microsoft's behalf, just to produce more bloated non-selling products like XBox One. Microsoft's recor of '50-percent-success' (win95, win98/ME, Win2000/XP, WinVista, etc.) will destroy them in a market where they actually have competitors..have they even considered this? I think not.