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What does Microsoft’s restructure mean for gamers?


Today Microsoft announced a restructure which will change the way that the entire company operates, and this could have a significant impact on Xbox in the years to come.

Essentially, Microsoft is changing from a divisional organisation to a functional one.

Different types of organisations

Almost all organisations above a certain size are split into divisions, usually along product lines. Microsoft had Windows, Online Services, Server and Tools, Business and Entertainment and Devices (that’s Xbox). This is the standard way to run a big corporation, but it often means that each division acts like a separate company, fighting for power and resources.

“Only one big company in the world works like this: Apple”The other way to run an organisation is to make it functional. Only one big company in the world works like this: Apple. There is no iPhone division or iPad division, but instead functions. The company is split into Design, Software Engineering, Hardware Engineering, Marketing and so on. Microsoft’s new structure is very similar: Engineering, Marketing, Business Development and Evangelism, Advanced Strategy and Research, Finance, HR, Legal, and COO.

What are the advantages of being a functional organisation?

When a company organises itself around functions rather than product divisions, it means it can act in its own best interest and be more innovative.

When Apple created the iPhone, it was a threat to the iPod, whose sales have now tailed off as smartphones have cannibalised them. The reason why Apple was able to create the iPhone so easily is that there was no iPod division, so no political battle to save one product from another. Functional organisations have fewer incentives to maximise the profits of each division, and more incentives to work together as a whole.

What does this mean for Xbox and gamers?

The Xbox division is now going to be split into the various functions across Microsoft, with no single person responsible for it. Perhaps that’s why Don Mattick left recently: his job doesn’t exist any more.

“Perhaps that’s why Don Mattick left recently: his job doesn’t exist any more”Little is likely to change in the short-term as Microsoft employees absorb these changes. In the long-term, it means that the Xbox One won’t have the protective political structure to defend it. Microsoft’s console will have to earn its right to exist alongside everything else. On the other hand, it’ll be easier for Microsoft as a whole to create better products, and gamers could be beneficiaries of that.

The author of this fine article

is the Editor at Thunderbolt, having joined in November 2000. Get in touch on Twitter @PhilipMorton.

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