SEATTLE – Microsoft Corp. is reorganizing its corporate structure and giving one of its newest executives broader powers in an effort to better compete against rivals including Google Inc. and Yahoo Inc.
The changes announced Tuesday also are designed to respond to criticism that the company has become weighed down by bureaucracy, leading to communication problems and product delays.
Microsoft said it plans to move toward more Internet-based service offerings. Products from competitors, including Web-based consumer e-mail and online updates for business software, are seen by some as a serious, long-term threat to Microsoft and its dominant Windows operating system.
“It’s sort of a response to the whole way computing is evolving,” said Matt Rosoff with independent analysts Directions on Microsoft.
Under the changes, Ray Ozzie, a highly respected software veteran who came to Microsoft in March when it acquired his company, Groove Networks, will be charged with helping the company coordinate and improve Internet-based service offerings. These include Windows Update, the company’s online tool for issuing security fixes; its MSN consumer online unit, including Web-based e-mail, instant messenger and search technology; and its Xbox Live online video-game service.
Ozzie will retain his title of chief technical officer. He is one of three at the company.
Rosoff said the changes come because Microsoft needs to get better at offering online updates and other programs to compete against rivals ranging from Salesforce.com Inc. to International Business Machines Corp.
A long-term concern is that companies such as Google could offer enough Web-based services – ranging from storing e-mail to searching computer desktops – that consumers would no longer see a need to buy the Windows operating system, Rosoff said.
Microsoft CEO Steve Ballmer said the company also hopes to improve in other areas, such as making money from Internet advertising and selling products via subscription rather than as stand-alone items.
The company’s reorganization will merge seven business units into three divisions. That is aimed at helping the company become more nimble and giving executives broader power to make decisions without bringing in top leaders.
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