Why Microsoft is splitting up Windows in its latest reorganization

Why Microsoft is splitting up Windows in its latest reorganization

Microsoft is embarking on yet another reorg, arguably the biggest since Satya Nadella took over as CEO four years ago. In this one, Windows will be split into sections all in the name of making Microsoft over to focus on its high-growth businesses.

Microsoft is splitting up its Windows and Devices Group and moving the pieces into two new engineering units: Experiences & Devices under Executive Vice President Rajesh Jha and Cloud + AI under Executive VP Scott Guthrie. A couple of units that are currently part of Microsoft’s AI + Research group are going to be moving into Guthrie’s new organization. Windows and Devices chief Terry Myerson is leaving the company as part of the reorg.

Microsoft is making these moves because the PC market is no longer growing much, if at all. Its cloud and subscription businesses are growing, however.

Now, some of the company’s recent strategy moves make more contextual sense. Last year, Microsoft laid the groundwork designed to make Windows part of a recurring subscription business via Microsoft 365, which is a bundle of Windows 10, Office 365, and elements of the Enterprise Security + Mobility service.

Microsoft is hoping it can do with Windows what it did with Office. The company managed to turn its individual on-premises Office products into a cloud bundle with Office 365 — which is growing even faster than Microsoft itself expected. (Microsoft officials have predicted the company could have two-thirds of its Office users in the cloud by its fiscal 2019.) Now, it’s trying to do something similar for Windows with Microsoft 365: Create a bundle of cloud services anchored by Windows 10 that will provide the company with a recurring revenue stream.

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