Microsoft reorgs its Office business to focus on four new investment areas

Microsoft's OneNote business is getting a big push in the newly reorganized Office business. Here's what else the company is prioritizing with its latest moves.
Written by Mary Jo Foley, Senior Contributing Editor

Up until last month, the Office team at Microsoft was organized pretty much the same way it has been for some time: Along Office client and Office server/services lines.


Corporate Vice President Jeff Teper ran Office server and services; Corporate Vice President Kirk Koenigsbauer ran Office client and services. Both of those businesses became part of Executive Vice President Qi Lu's Applications and Services Group (ASG) last summer as part of the One Microsoft reorg.

In February 2014, Lu outlined in an internal memo the responsibilities of the handful of teams that were part of his organization, spanning Bing, MSN, Advertising, and Office.

Some time last month, Lu took steps to further refine the Office piece of the business, according to my sources. Instead of reinforcing the Office divide along client/server lines, Lu reorganized that part of the business around a few key cross-platform groups.

As Bloomberg reported on June 2, Office server chief Teper has moved into a new role and is now working on corporate acquisitions/strategy. (Koenigsbauer is still working on Office client, I hear.) But that wasn't the only change in Lu's latest reorg.

Replacing Teper, at least in part is Rajesh Jha, I hear. Jha's title, as of mid May, was Corporate Vice President for Office Services and Servers (Teper's former title). Jha is responsible for Office 365, among other products. Jha also has responsibility for Exchange and both Outlook and Outlook.com, my contacts say.

This combined Exchange/Outlook/Outlook.com is one of the new Office-business hubs. The others include a combined OneDrive/SharePoint Online headed by Corporate Vice President Chris Jones and the combined Skype/Lync team which is run by Corporate Vice President Gurdeep Singh Pall.

With these combined groups, at least in theory, there's no software/services divide. There's no consumer/enterprise divide. The teams focused on cloud storage are sitting together. All the teams focused on mail are together. Ditto for teams focused on unified communications.

And then... there's OneNote.

Microsoft has tried repeatedly to make OneNote one of its signature products. OneNote is feature-rich and cross-platform (running on iOS, Mac OS X, Android, Windows, Windows 8, Windows Phone and more). But it's still too hard for mere mortals to pick up quickly and use productively.

Nonetheless, Microsoft management genuinely believes that OneNote still could rise to be one of the company's flagship products. That's why Microsoft included an "open OneNote" button on its Surface Pro 3 pen. It's why its stalled Surface Mini was designed to be a note-taking-optimized device.

While OneNote remains part of the Office "suite" of products, it is also its own business now on a par with the other three cross-platform pillars (OneDrive/SharePoint; Exchange/Outlook; Skype/Lync), according to one of my sources. OneNote used to be part of an Authoring Group inside Office, alongside Word and Publisher. Now it's being set up as a separately operating unit reporting directly to Lu. 

These four new cross-platform groups (OneNote, Exchange/Outlook, OneDrive/SharePoint and Skype/Lync, more than Office itself, are where Lu and Microsoft will be making big bets, moving forward.

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