The sudden departure of powerful Windows boss Steven Sinofsky this week is the first step in a plan by CEO Steve Ballmer to remodel Microsoft Corp as a much more integrated operation in an attempt to take on Apple Inc and Google Inc at their own game.

After nearly 13 years at the helm of the world's largest software maker, which just launched its first own-brand computer, sources inside the company say Sinofsky's departure signals Ballmer's new-found focus on co-operation between its self-sufficient -and sometimes warring - units.

"What I'm hearing over and over is collaboration and horizontal integration is the new mantra," said one Microsoft insider, who asked not to be named. "They (top management) understand that, if they don't move to a model where devices and software are more integrated across the entire Microsoft system, they are in a weak position."

After floundering for most of the last decade, Microsoft is trying emulate the way Apple's software and hardware - such as iTunes and the iPhone - work perfectly together; or how Google's online suite from Web search to YouTube and Gmail are seamlessly joined.

Microsoft, which Ballmer rechristened as a "devices and services company" last month  has all the parts, analysts say, but has failed to put them together. Now Ballmer looks set to reshape the company to try to make that a reality.

More fundamental organisational shifts could be in the cards.