Sixteen months into his tenure as CEO, Microsoft’s Satya Nadella shuffles the company’s senior leadership, with four top execs leaving. One remaining leader, Terry Myerson, stands out in the added responsibility he has been handed.
Terry Myerson, the executive leading the development of Microsoft’s next version of Windows, was already overseeing a high-profile operation at the Redmond company.
His reach broadened substantially Wednesday with the announcement of a reorganization that would also give him responsibility for all of Microsoft’s hardware teams.
Microsoft is undertaking its third corporate reshuffling in as many years, announcing the departure of four senior executives and combining the development teams that build the company’s hardware and software.
Microsoft’s senior leadership
With the moves Microsoft made Wednesday, here is how the company’s top leadership shapes up:
• Chris Capossela, executive vice president and chief marketing officer
• Kurt DelBene, executive vice president, corporate strategy and planning
• Scott Guthrie, executive vice president, Cloud and Enterprise
• Amy Hood, executive vice president and chief financial officer
• Kathleen Hogan, executive vice president, human resources
• Peggy Johnson, executive vice president, business development
• Qi Lu, executive vice president, Applications and Services group
• Terry Myerson, executive vice president, Windows and Devices group
• Harry Shum, executive vice president, technology and research
• Brad Smith, executive vice president and general counsel, legal and corporate affairs
• Kevin Turner, chief operating officer
Stephen Elop, the former Nokia chief executive who led Microsoft’s hardware unit after Microsoft bought the Finnish company’s handset group last year, will leave the company after a transition period.
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His Devices and Services group, the builder of hardware from the Xbox game console to Surface tablets, will be combined with Myerson’s Operating Systems Group and restyled as the Windows and Devices group.
That gives Myerson oversight for the vast majority of the brands Microsoft is known for among technology consumers, from Windows and the Internet Explorer Web browser (along with its successor, Microsoft Edge) to the Xbox game console.
Also slated to leave are Eric Rudder, a former leader of the server and tools and research units; Mark Penn, chief insight officer and a former director of strategy at the company; and Kirill Tatarinov, leader of the Microsoft Business Solutions group.
Their departures mean more functions will be added to the company’s two other engineering units: the Cloud and Enterprise group headed by Scott Guthrie and the Applications and Services group led by Qi Lu.
The trimming of Microsoft’s senior leadership team is the largest reshaping of the executive ranks in Satya Nadella’s 16 months as chief executive. An earlier, smaller shuffle occurred in March last year.
In an email to employees early Wednesday, Nadella said the moves fit within his aim of making Microsoft a more nimble company. Nadella has spent much of his time as the company’s leader preaching better alignment of teams and goals at a business with a reputation for corporate infighting.
One reason for the latest moves, he said, is “to organize our engineering effort into three groups that work together to deliver our strategies and ambition.”
It’s been a rapid rise for Myerson, 42, who has seen his domain expand with each organizational reshuffling of the past few years.
He came in 1997 after Microsoft acquired Interse, a company he founded that makes software analyzing Web traffic. For eight years, Myerson headed the team developing Exchange, Microsoft’s popular corporate email, contacts and calendar software.
He then ran the engineering side of Microsoft’s phone operating-system group, and championed the decision to essentially throw out the existing Windows Mobile development work and start from scratch in a bid to better compete with Apple’s world-beating iPhone.
In 2011, Myerson was promoted to lead the entire phone group, which was struggling to gain traction in the marketplace for Windows Phone. That challenge remains to this day.
When then-CEO Steve Ballmer ordered the consolidation of the mobile and desktop Windows units into one team in 2013, Myerson was named to lead the newly created Operating Systems group. Last year, the MSN online services group was added to Myerson’s domain.
Known for having a blunt demeanor, Myerson in recent years also has been giving increasingly polished presentations at the company’s large public events.
At last year’s Build conference for third-party developers, Myerson was already talking about devices, touting universal Windows apps that would be a step toward unifying developer platforms across Microsoft devices,
At this year’s Build, Myerson talked about making the upcoming Windows 10 “the most attractive development platform ever” not only across various Windows devices but also for developers who’ve created Android or iOS apps.
With Wednesday’s executive reshuffle, Myerson will now be in charge of Windows as a service across PCs, tablets, phones and other devices, as well as building “all of our Microsoft devices including Surface, HoloLens, Lumia, Surface Hub, Band and Xbox,” according to Nadella’s memo.
“It’s a very big organization,” said Wes Miller, an analyst with Directions on Microsoft in Kirkland. “But in some ways it also harmonizes the disparity that was there previously. It’s just kind of weird to have one team building the hardware and one team building your software.”
Elop’s departure wasn’t a surprise to analysts.
Elop, who was a candidate in the CEO search that resulted in Nadella’s selection, headed Microsoft’s business unit before leading Nokia. He engineered with Ballmer the sale of Nokia’s struggling phone-hardware business to Microsoft in late 2013.
Despite steep cost cuts, the phone business has been going in reverse from a financial standpoint. During the first three months of the year, Microsoft lost money on each smartphone it sold. The unit, Microsoft said in April, “did not meet its sales volume and revenue goals,” and was at risk of a writedown.
Daniel Ives, an analyst with FBR Capital Markets, said Elop’s departure is an indictment of the company’s mobile-device strategy following the $7.5 billion deal.
“Elop getting the exit speaks to Microsoft’s view that Nokia and the overall mobile strategy (were) clearly not heading down the right path,” Ives said in an email.
He said he expects Microsoft to take a charge in the next year to account for the reduced value of the assets acquired in the deal.
In contrast to Ballmer, “Nadella does not wear rose-colored glasses,” Ives said.
In July, Nadella announced a restructuring that reduced by about half the workforce acquired in that deal. The 18,000 layoffs also included cuts to a range of other Microsoft business units.
The reorganization announced Wednesday, which goes farther than a 2013 restructuring under Ballmer, will consolidate Microsoft’s engineering efforts into Myerson’s group and the two other main teams.
Microsoft Business Solutions, the maker of software designed to help companies track sales and manage other elements of their business, will be looped into Guthrie’s Cloud and Enterprise unit. And the company’s education-focused initiatives will now reside in Lu’s Applications and Services group.
The changes remove an outlier left over after Ballmer’s 2013 reorganization, which eliminated most of the distinct product groups that ran essentially as their own business, centralizing functions like marketing and sales, and grouping engineering teams into fewer units.
But Microsoft Business Solutions, under Tatarinov, was a distinct business unit, and even physically separate, in Bellevue’s Eastgate area, away from Microsoft’s downtown Bellevue cluster and Redmond campus.
“That’s a message here,” Miller said. “If you see yourself as super different, and not working together with other teams, you’re not going to be working that way for long.”
Penn, a former adviser to Bill and Hillary Rodham Clinton who also led the Burson-Marsteller public-relations giant, will head the new Stagwell Group, which will invest in media, research and marketing companies. Introduced to the world by news release Wednesday, Stagwell said it has raised $250 million in funds to invest, including a contribution from Ballmer.
“I’ve worked closely with Stephen, Eric, Kirill and Mark and have incredible respect for each of them and wish them well,” Nadella said in the note to employees.