Microsoft restructure 1 July will reshape devices and services

Redmond's major announcement about the vendor's future will focus on four reorganised divisions, US insiders say

Cue the music and hit the lights, Microsoft is finalising details on the eve of a major announcement and massive reorganisation.

If insider reports are correct, Microsoft will emerge from the realignment with four major divisions: enterprise business, hardware, applications and services.

Reports have indicated the vendor will unify its Windows products, and focus more attention on development and marketing of devices and services -- with the announcement scheduled for 1 July.

CEO Steve Ballmer (pictured at WPC 2011, centre) is said to have been working to consolidate several products and operating divisions, including the unification of Windows and Windows Phone.

This would be the first restructure at Microsoft since 2008, and comes as the company continues to search for ways to revitalise its OS business.

Depending on which analyst you read, Windows 8 is either keeping pace with previous OS releases or is floundering so badly that it has fallen behind Windows Vista.

Meanwhile, Microsoft appears to keep telegraphing a greater desire to get into hardware.

In October 2012, Microsoft released its first tablet, Surface; it's selling in decent numbers but lagging far behind Apple's iPad and other tablets running Google Android.

Microsoft is reportedly loaning Dell $2bn for its leveraged buyout. Recently, Microsoft unveiled XBox One, a game console that looks more like a home server and internet appliance.

And Microsoft also, reportedly, has held unsuccessful talks to buy Nokia's handset division.

The other area Microsoft is pushing is services.

Over the last few weeks, Microsoft disclosed that Windows Azure, its cloud service, is now generating more than $1bn in revenue.

It's also pushing Office 365 hard, trying to convert traditional licence holders into services contracts.

For now, the reorganisation is an internal affair.

Reports say Ballmer has been working on the reorganisation with a select group of advisors and senior executives -- which is making some division heads nervous about their jobs.

Ballmer demonstrated his willingness earlier this year to make big decisions -- by letting go of Windows chief Steven Sinofsky.

Current smoke signals are leading some to think the reorganisation will be radical.

How these changes will affect the channel and Microsoft's partner relationships is unclear.

While Microsoft maintains it's a channel-centric company, its foray into tablets has been anything but channel-friendly.

Surface competes directly against OEM partner devices, and Microsoft has yet to make the device available to providers for resale.

Other recent changes could already be affecting the channel.

HP recently announced a partnership with Google to resell Google Apps, the cloud platform that competes with Microsoft.

Google is also working with Lenovo, Acer and Lenovo on products based on the Chrome OS. While these products are in limited channel distribution, they do show how the once rock-solid Microsoft foundation has been fractured.

If Microsoft announces this reorganisation on 1 July, it will give resellers roughly a week before the start of the annual Worldwide Partner Conference this year in Houston, to digest and assess the changes.

Microsoft will likely put its best face on the changes in its general sessions and keynotes, as it often does. Behind the scenes though, Microsoft's current and future operations will be the topic of much discussion between Microsoft's management and strategic partners.

As part of our special editorial partnership, CRN is republishing this article from Channelnomics