Microsoft Chief Executive Steve Ballmer announced a broad reorganization of the company into three large product groups in an effort to improve decision-making at the Redmond company.

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Microsoft Chief Executive Steve Ballmer announced a broad reorganization of the company into three large product groups in an effort to improve decision-making at the Redmond company.

Under the new alignment, the company is reducing the number of business units from seven. The three broad product groups each will be headed by executives with the title of president.

Microsoft also announced that Windows chief Jim Allchin will retire at the end of 2006, after the upcoming Windows Vista operating system goes on sale.

“These changes are designed to align our business groups in a way that will enhance decision-making and speed of execution, as well as help us continue to deliver the types of products and services our customers want most,” Ballmer said in a news release.

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Microsoft’s bureaucractic processes have been increasingly critized by current and former employees who blame a heavy management style for employee defections and slowing product releases. Ballmer’s last major reorganization was in 2002 when he divided the company into the seven business units.

Allchin will be replaced by former sales chief Kevin Johnson. In the meantime, they will head the new Microsoft Platform Products and Services Division, the largest of the company’s three groups. It includes the Windows line, including PC operating systems, servers and programming tools. MSN is also in the group, instead of a standalone division.

The new Microsoft Business Division will be headed by Jeff Raikes. It will include productivity software products and the midsize business product line that used to have its own business division.

Robbie Bach will head the third group, Microsoft Entertainment and Devices Division, which includes games and hardware products. The mobile and embedded devices group will merge into this division, instead of being a standalone group.

Ray Ozzie, chief technical officer, is taking on broader responsibilities to boost services provided by all three divisions. Eric Rudder, formerly head of the server and tools group, will take a new job advising Chairman Bill Gates on advanced development efforts and overall technical strategy.

Brier Dudley: 206-515-5687 or bdudley@seattletimes.com