What the reorg will reveal about Microsoft's future direction

Ballmer could unveil plans to restructure the tech giant this week. The key question: How will responsibility for Windows and Office be divvied up?

Kara Swisher at AllThingsD reports that according to unnamed sources close to the situation, "Microsoft CEO Steve Ballmer is likely to unveil his plans to restructure the tech giant to a larger group of senior execs by July 1. ... Ballmer has been making these significant plans with limited consultation with the wider leadership group at the software giant. Instead, he has been working with only a small group of his direct reports and also some Microsoft board members."

While a reorg of Microsoft has been inevitable for months, the idea that it might happen this week brings all sorts of interesting possibilities and questions. Key among them: Is Ballmer's expressed "devices and services" vision for the future of Microsoft all a bunch of hype, or will he back it up with organizational changes that will make it happen?

As I explained when Andy Lees went on sabbatical earlier this month, the obvious post-reorg structure would reflect Ballmer's two pillars. In my opinion that would likely include Satya Nadella as head of "services" (he's going to play a key role in the Oracle Database 12c dog and pony show later today) and Don Mattrick as head of "devices" (in spite of his Keystone Kops impression last week on the Xbox One).

Whatever it may look like in the future, Microsoft right now is much more than just devices and services, and it's not at all clear how the rest of the deck will play out. It's possible that Qi Lu -- one of the few who currently holds the title "president" -- will take on more than just responbility for Bing. It's also possible the other president without much portfolio, Tony Bates of Skype lineage, will inherit a bigger empire as well.

We'll learn a lot about Microsoft's future direction when we see how responsibility for Windows (including Windows Phone) and Office are divvied up. Although Microsoft's been trying hard to turn Office into a "service," and there's the Surface "devices" slant with Windows, it seems highly unlikely to me that Ballmer will bury those flagship products under Nadella. That leads to a dilemma of fascinating proportions.

As far as I can see, there are four people qualified to head up the Windows/Office effort.

Kurt DelBene has been running Office since September 2010, when he took over from Stephen Elop. DelBene has come up through the ranks on the Office side and has 20 years of experience running Office, Outlook, Exchange, and pieces thereof.

Julie Larson-Green has been running the Windows dev side since Steve Sinofsky left last November.She has long roots in the Office effort, alongside Sinofsky, going back 20 years.

Tami Reller holds the title Chief Marketing Officer and Chief Financial Officer for Windows. Unlike Larson-Green, Reller came up through the ranks in the Dynamics division. There have been persistent rumors that she was in the running for the top Microsoft financial job, which was taken by Amy Hood (former CFO of the Office division) last month.

If the reorg lumps together Windows, Windows Phone, and Office (maybe even Dynamics), two of those three very powerful and senior people aren't going to be happy about being passed over as the new leader.

Finally, let's not forget Elop. Sure, he's been CEO of Nokia for almost three years, but ran the Microsoft Business division for nearly three years before that. At the time he left Microsoft, Elop was the company's eighth largest shareholder.

Imagine a future, if you will, where Microsoft buys out Nokia and pulls Elop back in to run a new Windows/Windows Phone/Business division.

Nancy Gohring at CITEworld lists many reasons why Microsoft probably wouldn't want to buy Nokia outright (last week the Wall Street Journal said talks between Microsoft and Nokia fell through). But Gohring also notes that Microsoft might be well-advised to buy Nokia as a defensive manuever to keep Nokia in the Windows Phone fold. InfoWorld's Ted Samson worked through the implications of Huawei taking over Nokia in just such a scenario.

Could Ballmer be waiting to make a grand announcement about Microsoft getting into the Surface-née-Nokia Phone business, as yet another prelude to the reorg?

One thing's for sure: Ballmer doesn't have too many reorgs left in him. At some point Microsoft's going to need a successor to the Bill & Steve show. With Sinofsky out of the running -- assuming he stays out of the running -- it's time to start grooming the next generation of Microsoft leadership. Elop wouldn't be a bad choice.

This story, "What the reorg will reveal about Microsoft's future direction," was originally published at InfoWorld.com. Get the first word on what the important tech news really means with the InfoWorld Tech Watch blog. For the latest developments in business technology news, follow InfoWorld.com on Twitter.

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