Microsoft has announced that it is to streamline its business in a bid to "speed up decision making".

Chief executive Steve Ballmer outlined plans yesterday to slim down the company's seven business units into three, each with its own president. The three units will comprise:

• Platform Products & Services (including Windows, MSN, and the Server & Tools division)
• Business (including Office and Microsoft Business Solutions)
• Entertainment & Devices (including Xbox and the Mobile Devices group)

Microsoft also announced the pending retirement of Jim Allchin, a 15-year Microsoft veteran who has run development for every version of Microsoft's operating system since Windows 98. He will retire after Windows Vista ships at the end of next year.

Meanwhile Ray Ozzie, chief technical officer and creator of Lotus Notes, who joined this year when Microsoft bought his company Groove Networks, gets an expanded role to include the group's strategy in software-based services.

Microsoft has rejected suggestions that it is realigning in light of the growing strength of companies such as Google and eBay, insisting that it represents a more efficient way to do business.

"Our goal in making these changes is to enable Microsoft to achieve greater agility in managing the incredible growth ahead and executing our software-based services strategy," said Ballmer.

However, the fact that the software giant will continue to report its financial results under the seven business units leads some to question how far the restructuring really goes.

The reorganisation has been closely scrutinised by Microsoft's small army of bloggers. One working under the title Mini-Microsoft suggested that it may be good for staff morale.

"Thank goodness. I felt like we've at least been thrown a bone. Microsoft certainly needed a reorganisation - something like a good, vigorous shaking of one of those snow-globes," he wrote.

"How it's all going to play remains to be seen. But I hope that, as part of the good shaking, some of the crust breaks off and gets swept out and some of the cream rises to the top."