The basic structural change eliminates eight product divisions and reshapes them into four new ones with goals meant to encourage cooperation, Chief Executive Officer Steve Ballmer explained.
"To execute, we've got to move from multiple Microsoft's to one Microsoft," he said in an interview.
Within the structure the company is dissolving, one of the dreaded possibilities was known within the company as having to "take a dependency," The New York Times reported Thursday.
To "take a dependency" meant having to depend on another division's research and development of a project -- generally the completion of a software product, which would stall progress elsewhere, the Times said.
The changes include giving the top executive in charge of Windows operating systems, Julie Larson-Green, responsibilities for developing new devices, including Xbox, the Surface tablet franchise and other hardware accessories, the Times said.
Qi Lu, the top executive in charge of Microsoft's search engine, Bing, will handle the Office software franchise and Internet teleconferencing service Skype.
One executive, Terry Myerson, will now handle all of the company's operating systems for computers, mobile devices and the Xbox gaming platform.
Satya Nadella, who runs Microsoft's cloud service, will be given additional responsibilities, including running the data centers that operate Microsoft's online services, the Times said.
Tony Bates, who was in charge of Skype, will be charged with handling business development, mergers and acquisitions, and relations with developers, the newspaper said.
"It's not like our old structure didn't allow us to do some of this. The question is whether you can amplify," Satya Nadella said.