Microsoft Breaks Up Windows with Major Product Group Reorg

Microsoft CEO Satya Nadella on Thursday announced a major shake-up of his company’s technology organization and leadership. Windows engineering is being split into two new groups: Cloud + AI Platform, led by Scott Guthrie, and Devices and Experiences run by Rajesh Jha.

Terry Myerson, longtime leader of Windows, will leave after 21 years with the company. Myerson wrote on LinkedIn that his departure was in the works for some time. 

Joe Belfiore will continue to oversee Windows experience and partnerships with OEMs and other ecosystem players.

“The future of Windows is bright as we continue to innovate across new scenarios and device form factors, and more deeply connect to our Microsoft 365 offerings,” Nadella wrote in an email to employees announcing the reorganization. Belfiore will reveal the Windows road map at Build, Microsoft’s annual developer conference, in May.

Satya Nadella

Satya Nadella

The reorg aims to tap into the ubiquity of cloud-based compute and the growing opportunity to extend artificial intelligence (AI), Nadella wrote. He also outlined numerous management shifts.

“These technological changes represent a tremendous opportunity for our customers, our partners — everyone,” Nadella wrote. The move reflects efforts last year to offer Windows as part of the Microsoft 365 subscriptions and start designing Surface hardware, Office 365 and Windows together.

It’s also the latest sign of the decreased significance of Windows as a source of Microsoft’s growth, observers noted.

“Microsoft is making these moves because the PC market is no longer growing much, if at all. Its cloud and subscription businesses are, however,” said Gartner research VP Michael Disabato, “Microsoft doesn’t care if you run Office on macOS, Win10, iOS or Android. It wants you to run Office, not Google Docs or anything else. 

Disabato said the move also points to the failure of Windows to achieve its potential.

Michael Disabato

Michael Disabato

“The slowdown in PCs is reflected in the upswing in Macs,” he noted. “The concept of an ecosystem where all the devices work together is what makes Apple attractive. Windows still needs a lot of hand-holding. The boomers are tired of being IT specialists and the millennials don’t want to be bothered. Windows is still the platform of choice in the enterprise, although if [mobile application management]-only BYOD takes off the way I think it will, that too will change.”

While Macs account for approximately 10 percent of systems used today, according to NetMarketShare, most businesses that use Windows today aren’t likely to move to Macs or other platforms, said Directions on Microsoft analyst Michael Cherry. Microsoft’s key focus is on growing Office 365, which supports all major platforms; therefore, the company has less at stake, Cherry said.

“It’s not so much that there’s less risk of going with other platforms today, but it’s probably incredibly expensive to do it,” he said.

The move also underscores the fact that the Universal Windows Platform and Windows Store have yet to gain the broad appeal that the iOS and Android app marketplaces have achieved.

“Despite all of the things Microsoft has tried, I go to the Windows Store and the applications I want to see aren’t there,” Cherry said. “A year ago, at Build, they promised big things were coming to the Windows Store. They promised iTunes was coming, but where is it?”

Enterprise customers have also complained about the release cadence of Windows.

“People are very upset that these releases are coming out and it is having a major a major impact on patch management,” said Peter Fidler, president of WCA Technologies, a New York-based MSP and Microsoft silver partner.

Despite some of those issues, Fidler said most of his customers have upgraded to Windows 10 or plan to do so.

“Our customers, which are primarily financial services, legal and nonprofit, all have line-of-business applications that run on Windows — and that’s what they are sticking with,” he said.

Cherry speculated that it’s possible Microsoft might slow down its release cadence slightly — perhaps one feature update per year rather than two, and extend the 18-month support cycles to 24.

“They may modify the cadence, but they’re not going to go back,” he said, adding that for the most part, the reorg should have little impact.

“If I were a partner or an IT person, this news wouldn’t excite me or worry me.”