If Microsoft Corp.’s employees didn’t already realize cloud computing and artificial intelligence will drive their company’s future much more than its venerable Windows software, they sure know it now.

Microsoft Chief Executive Officer Satya Nadella today announced a series of major organizational changes that will restructure the company’s efforts in several key areas.

The driver behind the move is the forthcoming departure of Terry Myerson, a 21-year Microsoft veteran who serves as executive vice president of the Windows and Devices Group. Nadella (pictured) wrote in a public letter to employees that Myerson will stay aboard for a few months to help with the initiative.

“I see this first as cloud and services becoming even more important and that AI is an integral part of real products,” said Patrick Moorhead, president and principal analyst at Moor Insights & Strategy. “I would expect both Windows as a Service and Azure Stack to accelerate. This was always the plan, but when I see the Office 365 leader leading Windows and Azure leading Windows Server, I’m expecting a faster transition.”

A new direction for Windows

As part of the reorganization, work on Windows is set to be split up between two groups. The first is a new division that will focus on user experience and is set to operate under the name Experiences & Devices. Nadella has selected Rajesh Jha, executive vice president of the Office 365 group, to lead it.

Besides Windows, the Experiences & Devices division’s area of responsibility will also encompass the productivity suite, third-party applications and hardware. The latter area seems to be a particular focus of Nadella’s reorganization.

The CEO has appointed Microsoft Devices head Panos Panay chief product officer to lead hardware development. Moorhead sees the move as a positive sign for Microsoft’s hardware efforts.

“Having a chief product officer is an indication that the company is leaning more into hardware products, not backing off,” he told SiliconANGLE. “We could expect more smart home and office devices and even more PCs and mixed-reality hardware.”

Analyst Rob Enderle of the Enderle Group, meanwhile, sees Microsoft’s new emphasis on hardware as part of a push to avoid falling behind the competition. “Products like Amazon’s Echo are now the go-to for the future and the Alexa digital assistant is moving through the market encompassing everything from TVs to cars,” he said. “Chasing Amazon is likely no more fun than chasing Apple was and Microsoft clearly doesn’t want to make the same mistake of letting Amazon get the kind of massive lead that Apple and Google enjoyed.”

Bringing cloud and AI together

While the Experiences & Devices division will be responsible for Microsoft’s hardware efforts and the Windows user experience, development of the operating system’s core components will be overseen by Jason Zander. The executive is the newly appointed head of the company’s Azure public cloud. According to Nadella’s letter, the decision to group the two platforms together is driven by a desire to “accelerate our efforts to build a unified distributed computing infrastructure and application model.”

Jason Zander is taking over a position previously held by Scott Guthrie, who in turn has assumed an expanded role as the head of yet another new group called the Cloud + AI Platform division. It will be responsible the development of Azure and the company’s rapidly growing portfolio of artificial intelligence tools, a good portion of which are hosted on the cloud platform.

“It also looks as if AI and cloud are interdependent, which makes perfect sense as the cloud is where most of the data is,” Moorhead commented. “Some of the AI groups were rolled into product groups indicating to me that AI is becoming more real and is a broader part of products, and not just research.”

A team led by Microsoft Technical Fellow Alex Kipman, who helped create company’s HoloLens headset, will lead development of Azure’s speech, vision and other machine perception services along with mixed reality technologies. Most of the company’s other AI tools will move under the wing of a new AI Cognitive Services & Platform group.

Lastly, Nadella said Microsoft is forming an internal committee to ensure that its artificial intelligence efforts meet ethical standards. The move comes a year after DeepMind, Google LLC owner Alphabet Inc.’s AI research arm, did something similar in the wake of a controversy surrounding its use of patient data for algorithm development. Microsoft is clearly looking to avoid any such incidents as it steps up its AI efforts.

With reporting from Robert Hof

Image: Microsoft