Microsoft Corp. is reshuffling its business in an attempt to promote faster innovation and a sharper focus on devices and services. The move by the world's largest software maker comes amid lukewarm response to the latest version of its flagship Windows operating system and a steady decline in demand for PCs as people turn to tablets and other mobile gadgets.
CEO Steve Ballmer said in a memo to employees Thursday that the changes mean the company is "rallying behind a single strategy" and organizing by function. While it has been widely anticipated, it's too early to tell how well the reorganization will help Microsoft compete with more nimble rivals like Apple and Google.
"You don't make massive, sweeping changes like this unless something is wrong," said Colin Gillis, an analyst at BGC Financial, pointing to Wednesday's reports of declining PC shipments around the world.
Worldwide shipments of personal computers fell 11 percent in the April-June period, according to data from research firms Gartner and IDC. Gartner Inc. said the PC industry is now experiencing the longest decline in its history, as shipments dropped for the fifth consecutive quarter.
Analysts have blamed a massive consumer migration to tablets and other mobile devices for the falloff. But many observers also believe Microsoft's Windows 8 operating system -- which comes installed on most new PCs -- has turned consumers off.
"We are ready to take Microsoft in a bold new direction," Ballmer said in a conference call with reporters and analysts.
The shake-up is being driven by competitive pressures as two of Microsoft's once much-smaller rivals, Apple and Google, have emerged as the technology trendsetters. As consumers turn to mobile devices and Internet services, Microsoft has been scrambling to adapt to the upheaval.