MSFT Microsoft Corporation

By Jay Greene 

Microsoft Corp. is diminishing the role of its storied Windows franchise, which fueled its rise to the top of the personal-computer market in earlier decades, reflecting the massive shift in the way computing power is harnessed.

The software giant reorganized its business Thursday morning around its growing Azure cloud-computing operations and its stalwart Office productivity business.

Executive Vice President Terry Myerson, who ran the Windows business, will leave the company, according to an email from Microsoft Chief Executive Satya Nadella.

The move is designed to focus Microsoft on the biggest areas of growth for the company. In the last quarter, though the company doesn't disclose revenue for those businesses, it said Azure jumped 98% and Office 365 grew 41%. At the same time, its More Personal Computing unit, which includes Windows, gained 2% to $12.17 billion in the latest period.

"Having a deep sense of customers' unmet and unarticulated needs must drive our innovation," Mr. Nadella said in an email sent to employees Thursday morning. "We can't let any organizational boundaries get in the way of innovation for our customers. This is why a growth-mindset culture matters."

Microsoft declined to comment beyond Mr. Nadella's email.

For most of its 43 years, Microsoft and Windows were nearly synonymous. Under Mr. Nadella's predecessor, Steve Ballmer, products were sometimes stalled, or even killed, because they didn't help expand Windows' markets.

That Mr. Nadella is willing to shift the company's focus away from Windows illustrates the permanence of the shift from personal computing to mobile devices and the web. It also shows how Mr. Nadella is putting his own imprint on the tech giant.

"He's clearly not handcuffed by history," said Stifel Nicolaus & Co. analyst Brad Reback.

Mr. Nadella is able to make the move because, during his four-year tenure at chief executive, Microsoft has emerged as a leader in cloud computing. Its Azure operations is No. 2 behind Amazon.com in the cloud-infrastructure market. And its Office 365 productivity apps and its Dynamics business-software services are rapidly growing, multibillion-dollar businesses.

"The Microsoft of old could never have made this move," Mr. Reback said. "But the pieces were not in place to make the move."

Mr. Myerson, a 21-year Microsoft veteran, will leave the company and help with the transition "over the coming months," Mr. Nadella wrote.

Scott Guthrie, who runs the Azure business, will expand his existing role to lead the company's cloud and artificial intelligence business. Rajesh Jha, who has been in charge of Microsoft's Office group, will run the new Experiences & Devices group.

Write to Jay Greene at Jay.Greene@wsj.com

(END) Dow Jones Newswires

March 29, 2018 12:07 ET (16:07 GMT)

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