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Steven Sinofsky
Steven Sinofsky holds a Microsoft Surface tablet with skateboard wheels attached to show the strength of the device. Photograph: Lucas Jackson/Reuters
Steven Sinofsky holds a Microsoft Surface tablet with skateboard wheels attached to show the strength of the device. Photograph: Lucas Jackson/Reuters

Windows chief Steven Sinofsky pushed out of Microsoft

This article is more than 11 years old
Microsoft staff stunned as chief executive Steve Ballmer pushes out man many had seen as his successor

Two weeks ago Steven Sinofsky was in front of the world's journalists, attaching wheels to one of Microsoft's new Surface tablets to show the device was so tough it could withstand being used as a skateboard.

But on Monday evening in Seattle it was Steve Ballmer, Microsoft's chief executive, who put the wheels under the head of his Windows division and pushed him out of the company where many had seen him as a future leader.

Microsoft shares fell by 3% to $27 in early trading on Tuesday as the news reverberated around the web, leaving "Microsofties" themselves stunned as they tried to digest what the change will mean for the company. Sinofsky was "a tremendous talent," one said on Tuesday. Meanwhile "mini", an anonymous blogger inside the company, wrote: "People walking the hallways tonight at work certainly can't believe it. I can't believe it – working at a Microsoft without Sinofsky? Inconceivable."

Ballmer, 56, who has led the company since January 2000, is now isolated at the top – and could be next in line if shareholders feel Microsoft is not adapting quickly enough to a world where smartphones outsell PCs, search advertising is more profitable than games consoles, Google has almost as much cash and equivalents as the 37-year-old company, and Apple's iPhone alone generates more revenue, $17bn, than all of Microsoft's $16bn.

Sinofsky drove the development of Windows 8, the latest version now hitting stores, after taking over as president of the Windows division in July 2009, just as it was preparing to launch Windows 7 – the most successful version of Windows it has ever produced. At the company meeting in September, he won a standing ovation from the Windows team.

Ballmer is left with problems. The success of Windows 8, which forces users to adopt an entirely different interaction method than versions from the previous 20 years, is not yet clear. And Windows Phone, the mobile software challenging Apple's iPhone and Google's Android, barely has a fingerhold in the £200bn smartphone market. Microsoft's Bing search engine loses hundreds of millions of dollars a quarter and has made barely any impact on Google's dominance. Meanwhile it is smartphones, not PCs, that are introducing people in China, India and Africa to the internet – and many of those are powered by Android.

Tellingly, Microsoft's stock has wobbled between $20 and $30 since January 2002, and nothing Ballmer has done has shifted it. The rumblings among shareholders seeking his scalp will grow louder in 2013 if nothing improves.

In an email to staff, Sinofsky was emollient, suggesting that after 23 years, and having completed the Windows launch: "I have decided it is time for me to take a step back from my responsibilities at Microsoft … I have decided to leave the company to seek new opportunities that build on these experiences."

Former colleagues were full of praise. "What Steve did particularly well was very thoughtful planning processes that allowed the best thinking to come up through the organisation," one who worked with Sinofsky told me on Tuesday. "And then to drive a relentless cycle of development and testing. His legacy? The ability to come up with innovations, and the ability to ship [products]. He brought discipline." There was particular emphasis on the final word - for Sinofsky was a tough manager who didn't suffer fools gladly.

That, in fact, seems to have been his downfall, allied to Ballmer's unwillingness to loosen his grip on the company. Another former Microsoft staffer told Reuters that Sinofsky's "relentlessly aggressive" style had annoyed and alienated others – even Bill Gates, his long-time mentor who is still company chairman. "He had no one left to fight for him," one staffer told Reuters. "Gates gave him cover, so he must have eventually caved [to Ballmer]."

Sinofsky, 47, had prevailed in a number of other fights – including seeing off Gates protege and former chief software architect Ray Ozzie, according to journalist Jay Greene, a longtime watcher of the company. Profiling Sinofsky last month, Greene noted that "Sinofsky's critics say he's elevated those battles to a new level, thriving by marginalising rivals while running the company's most profitable businesses, Windows and Office."

The departure, which Microsoft sources suggested was not a firing, cements Ballmer's position – but leaves questions around how adaptable the company can now show itself to be as the world changes rapidly around it.

"I was expecting the other Steve to leave," said Richard Windsor, formerly analyst at Nomura who now runs his own RadioFreeMobile analysis site. "I view Steve Ballmer as an engineering driven drill sergeant who can be a bit like a bull in a china shop. Historically, this approach has been very effective but the new challenges that Microsoft now faces arguably need a more creative mind … I view this as a negative for Microsoft, as a change in its culture and philosophy would help the company better meet the challenges it faces in a world that increasingly looks beyond the PC. Whether Sinofsky was the right man to effect that change is highly questionable, but perhaps this manoeuvre opens the door to the next venture for Scott Forstall when he becomes free in 2013."

The reference to Forstall – forced out in October from his role as head of Apple's mobile software by his chief executive, Tim Cook, amid rumours that he, like Sinofsky, had created divisive tensions and fostered ambitions points to the huge pressures on both Apple and Microsoft amid the rapidly changing digital landscape. Google has not been immune either, having in July lost Marissa Mayer, one of its longest-serving senior staff, who left to run the struggling web property Yahoo.

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

But at Microsoft, the anonymous "mini" thinks this could just be the second act of a three-act play. "I don't believe his departure rules him out at all for Microsoft CEO. In fact, I think if he stays in tech and becomes CEO of another company it makes him an even more obvious choice to come back to Microsoft as its leader."

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