The loss wiped out the 1.35 percent gain during the official trading session and put Apple's stock market value at $814 billion. Microsoft shares dipped 0.35 percent after-hours to $106.10, putting its market capitalisation also at $814 billion. Microsoft had rallied by more than 3 percent during Monday's official trading session, when the market notched broad gains.
MICROSOFT Corp. is downgrading the role of Windows, the storied franchise that put the company atop the personal-computer market at a time when cloud computing didn’t exist.
Now, amid the massive shift in the way computing power is harnessed, the software giant will reorganize its business 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 internal email from Microsoft Chief Executive Satya Nadella on Thursday.
The move is designed to focus Microsoft on its biggest areas of growth. In its latest quarter Azure revenue jumped 98% while Office 365 grew 41%, though the company doesn’t give totals for those segments. In the same period, the More Personal Computing unit, which includes Windows, gained 2% to $12.17 billion.
“Having a deep sense of customers’ unmet and unarticulated needs must drive our innovation,” Mr. Nadella said in the email he 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 make executives available for comment.
In a post on Microsoft’s LinkedIn page, Mr. Myerson, who has run the Windows business since 2013, said the day was an “emotional” one for him but expressed his “ongoing enthusiasm for Microsoft.”
For most of its 43 years, Microsoft and Windows have been nearly synonymous. Under Mr. Nadella’s predecessor, Steve Ballmer, products were sometimes stalled, or even killed, because they didn’t help expand the market for the operating system.
That Mr. Nadella is willing to shift the company’s focus away from Windows illustrates the irreversible migration 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 break from the past because, during his four years as 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.
The company is breaking Windows in pieces. The platform technology, on which Microsoft’s partners build their own devices, apps and services, will now fall under Scott Guthrie, who runs the Azure business. Mr. Guthrie’s unit, called Cloud + AI Platform, will also include the company’s mixed-reality business, including Microsoft’s Hololens device, as well as its artificial-intelligence business.
Microsoft’s devices business, including its Surface lineup of computers, will fall to Rajesh Jha, who has been in charge of Microsoft’s Office group. The new, bigger unit, called Experiences & Devices, will also include Microsoft’s efforts to develop new features in Windows.
In his note, Mr. Nadella called the future of Windows “bright,” as the company pushes to develop features that take advantage of new types of devices and emerging technologies such as artificial intelligence. Nearly 700 million devices run Windows 10, the software’s latest version. All told, some version of Windows is on more than 1.5 billion devices world-wide. In the most recent quarter, the More Personal Computing unit accounted for 42% of Microsoft’s revenue.
“This is the most sweeping reorg that I can recall,” said Brad Silverberg, who ran the Windows division when Microsoft launched its seminal Windows 95 operating system.
In the 1990s, Windows was so dominant that a federal judge ruled that it was a monopoly. The U.S. Department of Justice sought to break up Microsoft, accusing the company of abusing its dominance in the PC operating system market to crush rivals. The company ultimately signed a consent decree in 2002, agreeing, in part, to make Windows interoperable with non-Microsoft software.
While Microsoft is still focused on building the platform upon which other tech companies run their technology, that focus is now on Azure, said Mr. Silverberg, a venture capitalist who co-founded Fuel Capital, a San Francisco-based firm. He praised Mr. Nadella’s acknowledgment of Windows’ reduced importance.
“He recognizes the world for what it is, not what it used to be,” Mr. Silverberg said. - WSJ
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