Microsoft chief executive Steve Ballmer said the company is being restructured in what is the first major overhaul for five years.
The software company will be streamlined around devices such as phones, games consoles, and services.
He said Microsoft would be able to react faster to changes in the market.
The move comes amid a decline in demands for personal computers, as consumers turn to tablets and other mobile devices.
In a memo to staff, Mr Ballmer said that the changes meant the company was "rallying behind a single strategy as one company - not a collection of divisional strategies".
Microsoft's new divisions include engineering, marketing and business development.
The company named veteran executive Julie Larson-Green as head of its devices and studios engineering group, overseeing hardware development, games, music and entertainment.
Terry Myerson will lead Microsoft's operating systems and engineering group, namely Windows. Qi Lu will head applications and services.
Under the reorganisation, Kurt DelBene, president of Microsoft Office, will retire, Microsoft said.
In November, Steven Sinofsky, then president of Microsoft's Windows and Windows Live operations, left the company weeks after the launch of Windows 8.
'Single experience'In a world where more people are using mobile devices and web-based services, Microsoft wants to see more of its products used on devices besides personal computers.
"Although we will deliver multiple devices and services to execute and monetise the strategy, the single core strategy will drive us to set shared goals for everything we do. We will see our product line holistically, not as a set of islands," Mr Ballmer said.
The "One Microsoft" strategy would seek to bring together diverse areas such as Windows, Windows Phone, Xbox, Surface, Office 365 and others.
He said: "Today's announcement will enable us to execute even better on our strategy to deliver a family of devices and services that best empower people for the activities they value most and the enterprise extensions and services that are most valuable to business," he said.
Microsoft remains the dominant PC software firm, with its Windows operating system. But in the fast-growing mobile sector, Microsoft is behind players such as Apple and Google, which sell devices and make the operating systems for tablets and smartphones.
Mr Ballmer said: "We will strive for a single experience for everything in a person's life that matters. One experience, one company, one set of learnings, one set of apps, and one personal library of entertainment, photos and information everywhere. One store for everything."
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