Microsoft says to streamline around devices, services

Microsoft Corp Chief Executive Steve Ballmer said on Thursday he was streamlining the software and media company around devices like phones and game consoles and services in its first major overhaul in five years.

Microsoft, which has been struggling to compete in a world of mobile devices and Web-based services, will reorganize its engineering efforts into four major groups and shift several top executives.

Ballmer is trying to bring products to the market faster and make the company more efficient, and wants to entice people to use Microsoft products, like Word and Office, on a variety of devices besides personal computers.

"We are rallying behind a single strategy as one company ��� not a collection of divisional strategies," Ballmer said in a memo to employees published on Microsoft's website on Thursday.

Its shares were up 1.3 percent at $35.14 in early trading on Thursday.

The four new engineering groups are operating systems, applications, Web-based cloud services and hardware devices. Units will also be dedicated to strategy and research, marketing and business development, Ballmer said.

Under the reorganization, Kurt DelBene, president of Microsoft Office, will retire, Microsoft said.

Cross Research analyst Richard Williams said while the restructuring seemed to make sense from a business perspective, it raised many questions.

"From a strategic perspective, it seems that they're just streamlining the operating groups to bring all ... into one group, all the applications all the cloud focus, all the devices. There's a certain logic to that that makes sense to us."

It was unclear whether, under the changes, Microsoft will offer less financial data about certain products, he said.

"It's a major concern if they use this opportunity to reduce the transparency, so we're hoping that's not the case," he said, adding he hoped for more details during a company conference call later Thursday.

Microsoft has been struggling with sharply declining personal computer sales that cut into its software revenue as consumers and some businesses increasingly favor smartphones and tablets.

Ballmer, who took over as CEO from co-founder Bill Gates in 2000, said he wants the company to be more like Apple Inc. The maker of the iPhone and iPad has roared past Microsoft in sales and stock market value in the past few years by smoothly melding its devices with online services such as iTunes.

Microsoft's last significant reorganization came in July 2008.

(Reporting by Supantha Mukherjee in Bangalore and Alexei Oreskovic in San Francisco; Editing by Robin Paxton and Jeffrey Benkoe)