Steven Sinofsky

Steven Sinofsky, President of the Windows Division at Microsoft, has left the company with immediate effect.

Sinofsky’s departure comes only weeks after the major launch of Microsoft’s latest Operating System – Windows 8.

A statement released by Microsoft Corporation (NASDAQ:MSFT) states that Julie Larson-Green will be promoted to lead all of Windows software and hardware engineering. Tami Reller will have her current role expanded, giving her responsibility for the business of Windows, as well as retaining her role as CFO and CMO.

In the press release, Sinofsky said: “It is impossible to count the blessings I have received over my years at Microsoft. I am humbled by the professionalism and generosity of everyone I have had the good fortune to work with at this awesome company.”

The shakeup at the top suggests a significant change in the way the tech giant does business. A forthcoming change was echoed by Larson-Green in the same statement:

“The products and services we have delivered to the market in the past few months mark the launch of a new era at Microsoft. We’ve built an incredible foundation with new releases of Microsoft Office, Windows 8, Windows Phone 8, Microsoft Surface, Windows Server 2012, and ‘Halo 4, and great integration of services, such as Bing, Skype, and Xbox, across all our products”

The news comes as a surprise, as it is only weeks after the release of the latest iteration of Microsoft’s flagship product; Windows 8. Furthermore, many had seen Sinofsky as a potential successor to Steve Ballmer, Microsoft’s current chief executive.

Ballmer said that the changes were implemented in order to ensure that Microsoft remains a market leader in the sector.

“The products and services we have delivered to the market in the past few months, mark the launch of a new era at Microsoft,” said Ballmer.

“To continue this success it is imperative that we continue to drive alignment across all Microsoft teams, and have more integrated and rapid development cycles for our offerings.”

MKM Partners  views the unexpected dismissal of Mr. Sinofsky as “a clear negative for the stock” as he was seen as a highly competent executive within Microsoft and at one point a potential heir to Mr. Ballmer. Any negative newsflow from this announcement may also contaminate consumer perceptions regarding Windows 8, contributing to delayed upgrades.

Barclay’s analysts state that the timing of the departure is particularly concerning, given the recent launch of Windows 8 and Surface, for which Sinofsky was responsible.

However, Morgan Stanley (NYSE:MS) does not view the departure as an issue of concern. They note that Microsoft Corporation (NASDAQ:MSFT) generally makes management changes after products ship, so the timing is in line with the normal realignment cycle of teams, as Microsoft Corporation (NASDAQ:MSFT) prepares for Windows Next. Sinofsky’s departure  underscores the broadening of the operating system requirements over time.