Microsoft has said it is reshuffling its business to promote faster innovation and a sharper focus on devices and services.
The move by the world's largest software maker comes amid a steady decline in demand for PCs as people turn to tablets and other mobile devices.
Microsoft Corp CEO Steve Ballmer said in a memo to employees that the changes mean the company is "rallying behind a single strategy" and organising by function.
Microsoft's new divisions include engineering, marketing and business development.
The company named veteran executive Julie Larson-Green head of its devices and studios engineering group, overseeing hardware development, games, music and entertainment.
She had been promoted in November to lead all Windows software and hardware engineering after Steven Sinofsky, the president of its Windows and Windows Live operations, left the company shortly after the launch of Windows 8.
Terry Myerson will lead Microsoft's operating systems and engineering group, namely Windows. Qi Lu will head applications and services.
Mr Ballmer stressed the company's focus on "one Microsoft" in his memo. He said Microsoft will move forward operating as a cohesive company rather than a "collection of divisional strategies."
Microsoft shares rose 50 cents to $35.20 in morning trading. The Redmond, Washington-based company's stock is up 32% since the start of the year, compared with a 17% increase of the Standard & Poor's 500 index.