Microsoft Reorganization: Windows Out, Cloud In

Windows' reign as king at Microsoft has come to an end. Microsoft's latest reorganization, announced [last week], is a big one -- and its main function is to position the company's focus squarely on cloud technology. Windows has been relegated under the cloud umbrella, as has pretty much everything else in the big tech company's portfolio.

The Redmond company is undergoing a massive reorganization of its engineering teams, the most significant restructuring since CEO Satya Nadella took the helm four years ago.

The shifts de-emphasize the company's flagship operating software and put the spotlight on its growing businesses: Office productivity software, artificial intelligence and cloud technology, which allows users to tap into rented computer power and data storage over the internet.

The reorganization is not necessarily a surprise, said Gartner analyst and former Microsoft employee Ed Anderson. Rather, it's an acknowledgment of a shift that has been happening gradually for years.

"It does fundamentally elevate cloud to be the primary driver for Microsoft going forward," he said.

In a sign of the times, Windows devices chief and longtime Microsoft executive Terry Myerson will leave the company. Cloud boss Scott Guthrie, who has long been leading Microsoft's cloud-computing initiatives, will take over as chief of one of the two new engineering groups announced Thursday.

Myerson, who joined Microsoft after it bought his internet startup in 1996, will stay on for a few months to help with the transition. In a post on LinkedIn, Myerson called the day "emotional," and said he was enthusiastic about Microsoft's future.

Reorganizations are common within Microsoft's huge ranks, but this one marks the end of the long Windows-dominated era.

Nadella's shift in priorities mirrors the company's financial results: Its Azure cloud-computing division grew 98 percent during the second quarter, and Office 365 revenue increased 41 percent.

Windows, on the other hand, saw minimal increases. The...

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