Here we go again: big changes coming to Microsoft

Steve Ballmer

No one’s quite sure what it is but more people are convinced that something big is happening at the highest levels of Microsoft. On Monday, AllThingsD reported that a “significant restructuring” of the software giant is in the works, citing unnamed sources close to the situation.

The report references CEO Steve Ballmer’s annual shareholder letter, which re-characterized Microsoft as a “devices and services company.” That is quite a shift from a company built on shipping shrink-wrapped boxes of diskettes or bundling the operating system on PCs and servers made by hardware partners IBM, HP, Dell et al. Update: Microsoft had no comment on this report.

This report comes a week after noted Microsoft watcher Nomura Securities analyst Rick Sherlund posited “big changes” to come, driven by a set of shareholders increasingly annoyed at Microsoft’s stagnant stock price. Sherlund put forth some pretty interesting options including the offloading of Bing search to Facebookor Yahoo in exchange for traffic acquisition costs or an outright sale of the Xbox franchise — a big “device” success — to another player, perhaps Samsung.

AllThingsD sources expect bigger roles to come for key Microsoft execs including Satya Nadella, president of the key Server and Tools unit — who will speak at GigaOM’s Structure later this month; Tony Bates, president of the Skype communications division; and Don Mattrick, president of Interactive Entertainment division. These are all respected executives but pressure is also building for Microsoft to bring in new blood — perhaps even at the tippy top. There have been repeated calls for Microsoft to dump Ballmer, over the years, for example.

In what could be related news, Microsoft CIO Tony Scott quietly left the company last week, news first reported by Geekwire and subsequently confirmed by Microsoft.

Microsoft is known for big, massive changes — like in the mid-1990s when it missed the internet for example. Still, these latest rumblings come at a critical time for Microsoft, which is at TechEd this week flogging Windows Azure as a key enterprise alternative to Amazon Web Services. And in a few weeks at its Build Conference, it will continue to tout Azure as well as the upcoming Windows 8.1 as a key OS for mobile devices where Microsoft is trying to make up for lost time

MSFT Chart

MSFT data by YCharts

This story was updated at 9 a.m. PDT with Microsoft’s non-comment.

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