Microsoft has revealed a major internal reorganization creating three new divisions, each with their own president.

Jim Allchin, currently group vice president of platforms at Microsoft, plans to retire at the end of 2006, the company revealed. He’ll leave after Windows Vista ships.

In a statement, Microsoft CEO Steve Ballmer, said the restructuring will help the software giant be more agile in the marketplace to provide not only software, but expand Microsoft's services strategy.

"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," he said.

"We see a new era of opportunity to provide greater value to our customers by weaving both software and services into forms that suit their needs."

Microsoft’s three hands

The three new divisions are the Microsoft Platform Products and Services Division, which will be led by Kevin Johnson and Allchin as co-presidents; the Microsoft Business Division, with Jeff Raikes as president; and the Microsoft Entertainment and Devices Division, with Robbie Bach as president.

Johnson is currently group vice president, worldwide sales, marketing and services, and he will be solely responsible for the Platform Products & Services Division once Allchin retires, according to Microsoft. Raikes presently holds the group vice president, Information Worker Business title, and Bach is currently senior vice president for the Home and Entertainment Division and chief Xbox officer at Microsoft.

In addition, Lotus Notes creator and Groove Networks Inc. founder Ray Ozzie, currently Microsoft's chief technology officer, will take responsibility for driving Microsoft's software-based services strategy and execution across the three new divisions, according to Microsoft.

Eric Rudder, senior vice president of Servers and Tools at Microsoft, also will be taking on a new role. He will work directly for Bill Gates, Microsoft's founder, chairman and chief software architect, focusing on the company's advanced development efforts as well as overall technical strategy, according to Microsoft. Rudder will transition into his new role following the launches of Visual Studio 2005 and SQL Server 2005, which are scheduled to take place November 7.