"Such a system has benefits, but the negative consequences can be severe. When employees know that someone on their team is going to take a bullet every year, competition and not cooperation between people is the natural result, along with all of the negative behaviors that go with it," Johnson said.
Instead of promoting collaboration, communication and sharing of information and resources, which are the things Microsoft needs to survive and thrive, this system leads employees to engage in information hoarding, noxious corporate politics and blame games, he said.
Michael Silver, a Gartner analyst, said there have always been reports of lack of cooperation and in-fighting among Microsoft units, a situation that has likely prevented the company from maximizing the potential synergies among products, which would yield a competitive advantage.
"At this point, Windows and Windows Phone should offer a much better combined experience, but the two are very separate," Silver said via email.
Microsoft also needs a better effort in marketing, which Silver said has been "subpar to say the least."
In addition, the company needs a more coherent design and user experience across its products. "They need someone to deal with this across the whole product line to ensure consistency and improve the user experience on every product individually and together," Silver said.
Rumors about the restructuring plan began floating around weeks ago. Microsoft will report its fourth-quarter earnings on Thursday of next week.
Juan Carlos Perez covers enterprise communication/collaboration suites, operating systems, browsers and general technology breaking news for The IDG News Service. Follow Juan on Twitter at @JuanCPerezIDG.