Maybe it'll help?
First, I see this having nothing whatsoever to do with Steve Jobs. Just saying.
Anyway, with that out of the way.. I see a few upsides and downsides. Will this work? I don't know.
Downsides:
* Possible lack of accountability, with just a head of the whole company and no divisional heads, projects could run out of control until such a time as Balmer personally notices them, sucking up time and resources for something that looks great to those working on it, but someone with outside perspective would see as a boondoggle.
* Excessive integration. This was one big problem they had with Windows 95 -- they had DLL hell from hell, with all these what should have been seperate components HEAVILY interdependent on each other. This caused them problems for years afterwards, even after WinME/2000 (when the Win95 line was discontinued in favor of the exclusive use of the Windows NT kernel based Windows line) they ended up with a mass of shell code and junk from this and it took them years to sort this mess out, and some of it still is not sorted out.
Upsides:
* COLLABORATION. I can't find any articles now that I tried to google it, but there've been plenty of historical articles about the hyper-competitiveness between Microsoft's divisions meaning that there's no collaberation -- people will KNOW there are two groups working on, say, the code for a menu, while due to being direct competitors they will be unable to share code or even techniques with each other. If they are taking radically different techniques, it may make sense to let both "finish" then either pick one or do a merge of the best of both -- but in general, it means duplicate effort for no reason, and two medicore to "OK" implementations when they could have gotten a better implementation done faster working together.
* Fewer meetings and overhead? Maybe.
*Ability to work on more projects? I listed "lack of accountability" as a disadvantage above, but if done right a nice "skunkworks" project may be more likely to be allowed to exist this way than with divisional heads as they had before.