Microsoft Corp. announced the departure of several executives Thursday, among them a Silicon Valley veteran recruited to help fix its unprofitable Web business and one in charge of marketing Windows Vista, and the promotion of more than a dozen others across the company.
The changes come just two weeks after Microsoft offered to buy Web portal and search competitor Yahoo Inc. for more than $40 billion, a move industry watchers broadly see as an admission that Microsoft's own Web strategy had failed.
If the proposed Yahoo takeover is completed, Microsoft is expected to make more radical changes as it blends the two companies into a more formidable challenger to Google Inc., the dominant player in the lucrative Internet search and advertising markets.
Steve Berkowitz, senior vice president of Microsoft's online business group, will hand off his duties to three insiders: Satya Nadella, currently in charge of search and search advertising engineering; Bill Veghte, a Windows marketing executive; and Brian McAndrews, formerly the chief executive of online advertising group aQuantive, which Microsoft acquired last year.
Nadella and Veghte were promoted to senior vice president. The top executive in Microsoft's mobile phone software business, Pieter Knook, also is leaving Microsoft. He will lead a new division of cellular operator Vodafone Group PLC. Andy Lees, formerly of Microsoft's server and tools division, was promoted to replace Knook.
No reason was given for Berkowitz's departure. He joined Microsoft in 2006 after turning around Oakland, Calif.-based Ask.com, which, with related sites, was acquired by InterActiveCorp for $2.3 billion during his tenure as chief executive.
Brought in to help turn around Microsoft's own Web business, Berkowitz was charged with expanding the audience on its disparate MSN and Windows Live sites ??” making them more attractive to advertisers ??” and forging new business relationships, such as the ad partnership announced last summer with social news site Digg.com.
"I don't know if he was able to take control of the pieces he would have needed to take control of in order to really turn around the online business," said Matt Rosoff, an analyst for the research group Directions on Microsoft.
Developing Microsoft's Live Search and adCenter, both of which the company revamped to better compete with Google Inc. in search advertising, were Nadella's parallel responsibility.
Microsoft's acquisition of aQuantive brought it a large network of Web sites, but selling advertising across those sites stayed under McAndrews while Berkowitz's team continued to sell ads on Microsoft-owned sites.
With Berkowitz's departure, all advertising efforts will be consolidated under McAndrews. MSN head Joanne Bradford will report to Nadella.
Veghte will gain responsibility for strategy, sales and marketing for Windows, Windows Live, MSN and Search. Microsoft said Michael Sievert, who worked for Veghte and was responsible for marketing Windows Vista, is leaving to pursue new endeavors. Brad Brooks was promoted to replace him.
Microsoft said Berkowitz will stay through August to help with the transition. "I wouldn't read too much into this yet," Rosoff said. "There will probably be further shake-ups as the integration with Yahoo happens." Microsoft promoted several other executives, among them Office leaders Chris Capossela, Kurt DelBene and Antoine Leblond. The three currently report to Jeff Raikes, the top executive in its business software division. Microsoft recently said Raikes plans to retire in September, and will be replaced by an outsider, Stephen Elop, who most recently worked at Juniper Networks Inc.