Microsoft's Windows unit head, once a possible CEO, exits

The executive most widely tipped to be the next chief executive of Microsoft Corp has left the world's largest software maker barely two weeks after launching the flagship Windows 8, as CEO Steve Ballmer moved to tighten his grip on the company.

The exit of 23-year company veteran Steven Sinofsky, head of Microsoft's Windows unit, is the latest - and most prominent - in a line of high-profile departures from the Redmond, Washington-based company, which is struggling to keep pace with Apple Inc and Google Inc in mobile computing.

The move was unexpected and neither Microsoft nor Sinofsky gave an explanation, although a senior executive at the company, who asked not to be named, said the decision was "mutual" and said he was not expecting Sinofsky to take a job at another company soon.

"This is shocking news. This is very surprising," said Brendan Barnicle, an analyst at Pacific Crest Securities. "Like a lot of people, I thought Sinofsky was in line to potentially be Ballmer's successor."

Ballmer told employees in a memo on Monday simply that: "Steven Sinofsky has decided to leave the company."

In a later media statement, he added that it was "imperative that we continue to drive alignment across all Microsoft teams, and have more integrated and rapid development cycles for our offerings".

That could be interpreted as disappointment in Sinofsky, 47, known as an uncompromising leader who wielded immense power as head of the Windows unit, the traditional center of Microsoft's business, but was not known for working well with other executives.

"Windows has to be much more thoroughly integrated with Xbox, with other parts of the company," said Barnicle. "I don't know that was something Steven was as excited about as focusing on Windows."

It could also suggest that Ballmer was not happy with the pace of progress under Sinofsky.

"Within Microsoft's lead cycle, Sinofsky was delivering at the early edge of it," said Colin Gillis, an analyst at BGC Financial. "But now the competition has moved from a one-year cycle to a six-months cycle."

Ballmer, 56, shows no sign of leaving after almost 13 years in the job despite a flat stock price for the last decade. He has now replaced all the leaders of Microsoft's five main operating units in the past four years.

LEADERSHIP STYLE

Sinofsky joined Microsoft in 1989 and soon made his mark as Bill Gates' technical assistant. He overhauled Microsoft's Office division before he was brought over to manage the release of Windows 7 in 2009.

That was regarded as a success and Sinofsky was then tasked with overseeing Windows 8, Microsoft's new-look, touch-friendly operating system designed to bridge the gap with mobile computing leaders Apple and Google.

At the same time, Sinofsky led the development of Microsoft's Surface tablet, its first own-brand computer, aimed at tackling Apple's wildly successful iPad head on.

Analysts said it may be too early to judge whether Windows 8 and the Surface have been a success, after launching on October 26, but Sinofsky's departure could have more to do with his abrasive management and ambition for the top job.

"It sounded like it had more to do with his leadership style," said Barnicle at Pacific Crest. "There wasn't really a next move for Steven at this point."

One former Microsoft staffer who worked with Sinofsky and other executives said Sinofsky's relentlessly aggressive style exasperated other leaders at the company and he may have alienated too many people, including his mentor Gates.

"He had no one left to fight for him," said the staffer, who asked not to be named. "Gates gave him cover, so he must have eventually caved."

Sinofsky himself shed no light on his exit.

"It is impossible to count the blessings I have received over my years at Microsoft," he said in a statement. "I am humbled by the professionalism and generosity of everyone I have had the good fortune to work with at this awesome company."

He did not announce any plans to take a job elsewhere.

Sinofsky will be succeeded by Julie Larson-Green, who will head the Windows hardware and software division, and Tami Reller, who will remain chief financial officer of the Windows unit. Together, they will report directly to Ballmer.

Sinofsky's departure comes two weeks after rival Apple shook up its own top management, forcing out mobile head Scott Forstall and retail chief John Browett.

One analyst cited talk that the moves might be related.

"Some are speculating that the availability on the market of Forstall might have something to do with Sinofsky's departure," said Gartner analyst Carolina Milanesi. "I doubt we will have to wait long to know if this is the case."

(Additional reporting by Sakthi Prasad, Nicola Leske and Sarah McBride; Editing by Edmund Klamann)