Microsoft Reorganization Shifts Focus Toward Growing Cloud Business

Thousands of layoffs are expected, but have not been confirmed.

Subscription News: Microsoft Reorganization Shifts Focus Toward Growing Cloud Business

Source; Microsoft

For the last week, news organizations have been eagerly anticipating an announcement of a major reorganization at Microsoft (NASDAQ: MSFT) which, reportedly, would include thousands of layoffs. According to GeekWire, on July 3, an internal memo to staff from Executive Vice President of Worldwide Commercial Business Judson Althoff, Executive Vice President of Global Sales, Marketing & Operations Jean-Philippe Courtois, and Chief Marketing Officer and Executive Vice President of Marketing and Consumer Business Chris Capossela outlined the reorganization of its consumer and commercial businesses, but it did not mention the layoffs.

The company held a live webcast on Monday to explain the changes and said employees would get additional information from their managers and team leaders as they kick off fiscal year 2018, which began July 1. Bloomberg was among the news organizations reporting that job cuts are likely to come as Microsoft reorganizes, stating the layoffs would be “some of the most significant in the sales force in years.”

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Among the changes is dividing Microsoft’s customer base into two segments: enterprise customers and small, medium and corporate (SMC) customers. The company will also create new teams and centralize functions which will be organized differently, said GeekWire. The goal of the changes is to position Microsoft to support other companies as they undergo their own digital transformations by building solutions with their customers and partners.

Enterprise teams will be focused on six industries: manufacturing, retail, health, financial services, government and education. According to GeekWire, the sales teams assigned to these industries will concentrate on business applications and infrastructure solutions. In addition, Microsoft wants to grow the consumer side of the house with a greater emphasis on gaming to take advantage of its growing usage. Other changes under the reorganization include the launch of new IoT vertical solutions and going after new markets like voice, mixed reality and artificial intelligence.

“We are confident that these changes position us to take full advantage of the opportunities before us and enable Microsoft to win in the consumer market,” said the memo.

TechCrunch pointed out that these changes come just a year after a major leadership change at Microsoft. On July 7, 2016, CEO Satya Nadella wrote a blog post announcing that COO Kevin Turner would leave Microsoft after 11 years. The following leadership changes were also announced in that memo:

  • Judson Althoff would lead the Worldwide Commercial Business, focusing on commercial segments including EPG, Public Sector, SMS&P, DX and Services.
  • Jean-Philippe Courtois would lead Global Sales, Marketing and Operations, spanning across 13 areas of North America and international businesses along with global Marketing and Operations organizations.
  • Chris Capossela would lead Worldwide Marketing and Consumer Business, fucosing on CCG, MSA and PSM, OEM and Microsoft Retail Stores, in addition to his worldwide marketing team.
  • Kurt DelBene would lead IT and Operations and Corporate Strategy.
  • Amy Hood would lead the current SMSG finance team and WWLP as well as the central finance team.

Under the new leadership structure, Courtois and Althoff would report directly to Nadella.

Subscription News: Microsoft Reorganization Shifts Focus Toward Growing Cloud Business

Source: Microsoft

“There is no doubt the world is changing – and Microsoft must evolve with it and ahead of it. Microsoft’s mission is universal, and I believe our values and high ethical standards are timeless. But we must apply them in a world that demands more solutions that are local in nature. Growing globally requires local capability to leverage all of Microsoft’s innovation, marketing and operations in the context of local opportunities and partnerships while overcoming constraints. This means we must do better at surfacing and trusting the insight from local teams on what it takes to drive our customers’ success. At the same time, we must empower the local teams with world-class global support,” Nadella said in last year’s blog post.

While Microsoft dropped slightly following the reorganization news, it has not yet had a significant impact. At 6:21 AM EDT, stock was valued at $68.17 per share. On the last day of its fiscal year, June 30, stock closed at $69.22 per share.

Subscription News: Microsoft Reorganization Shifts Focus Toward Growing Cloud Business

Source: Google Finance – Yahoo Finance – MSN Money

Insider Take:

Based on the timing of the announcement, it seems that Microsoft wants to start its fiscal year on a fresh note. The company wants to put a greater emphasis on new tools and on leveraging those where it feels it can succeed in the technology marketplace, particularly in the areas of cloud computing and business solutions. What remains to be seen is if and when layoffs are, indeed, forthcoming. In the last few years, Microsoft has cut thousands of jobs worldwide. It seems likely that a major reorganization would have to include job cuts as well. We’ll update the story as we learn more.