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More On Microsoft Reorg: Entertainment On The Map

Streamlining a sprawling seven-division megacorp into three may cut down on the red tape but it will take more than that to turn Microsoft into a nimble company — and it will take more than calling itself a software-and-services company to make it so. One clear signal from Tuesday’s announcement: this is Steve Ballmer’s company, with sales and marketing pros from his cadre as top decision makers. Then again, Ballmer created the seven-division version, too.

BusinessWeek: The reorg comes hot on the heels of a BW package on Microsoft’s woes and insiders’ desire for a different kind of company. A good overview. “This organizational structure makes it easier to hold executives accountable,” says Ted Schadler, vice-president and principle analyst at Forrester Research. “The old organizational structure did not.” Email to employees.

NYT: “Microsoft faces a huge bottleneck problem,” said Michael Cusumano, a professor at the Sloan School of Management at the Massachusetts Institute of Technology. “Microsoft has to change. There’s no doubt about it. But who knows how far and how deep this will go.”

MarketWatch: “If Microsoft is going to turn its newly-minted Entertainment and Devices unit into a profitable one, it must reverse a history of losses in its two comprising units. … In Microsoft’s past two fiscal quarters, however, neither division has been profitable, combining for $355 million in losses. Over the last year the two have combined for $437 million in losses.” But the divisions have been on the upswing, each increasing revenue by double-digits and outpacing most of the other divisions.

WSJ (sub. req.): “Under the same roof as Microsoft’s core Windows operating-system product line, MSN could be used as a distribution mechanism for future Windows features, said people familiar with Microsoft’s plans.” As for the Entertainment and Devices division, ” A critical mission of Mr. Bach’s group will be to devise a better strategy for competing with Apple Computer Inc., which has trumped Microsoft’s online music efforts with its iPod line of music players.”

USA Today: “This puts entertainment officially on the map as a key market for the company,” says Al Davis, analyst at McAdams Wright Ragen.

Related: Industry Moves: Microsoft Reorganizes Into Three Divisions: Xbox Guru Robbie Bach Gets Leading Role