Shakeup: Qi Lu is out; Microsoft shifts Cortana, Bing, Office, Skype

This morning saw Microsoft's breathtaking push to put Cortana in the driver's seat and breaking Office out into its own unit

Shakeup: Qi Lu is out; Microsoft shifts Cortana, Bing, Office, Skype
Credit: Thinkstock

The world woke up this morning to a torrent of news from Microsoft, embodied in an internal memo (you can see a copy on GeekWire) that describes a major restructuring of the Softie's sanctum sanctorum, and a press release announcing the new Microsoft AI and Research Group. There's a lot of change going on beneath the surface, but to me, the biggest takeaway is that Cortana has a new, much larger incubator.

TL;DR: Highly respected honcho Qi Lu is out, Cortana is getting grafted onto MS Research, Office is moving to its own group, and Skype's future is unclear.

Last night, Kara Swisher and Ina Fried at Recode broke the news : Microsoft's Qi Lu, executive VP in charge of the applications and services unit, is leaving the company due to health issues. The health issues weren't fully explored, but Swisher and Fried say they "arose from a bicycle accident that took place several months ago, according to sources." The sources aren't identified, and I haven't found independent confirmation.

Lu has had a remarkable career. He moved from Yahoo to Microsoft in December 2008, and then-CEO Steve Ballmer put him in charge of three hard-charging engineers: Brian McAndrews (advertising and publisher solutions), Yusuf Mehdi (product manager for MSN and marketing), and one Satya Nadella (search, the Microsoft portal, and the advertising platform). Elevated to president of online services in July 2009, Lu was the only top exec who survived the Ballmer-Nadella transition. Seven years ago, Nadella was working for Lu. By all accounts, Lu wasn't interested in taking over Ballmer's job.

Yesterday, Lu was in charge of the Applications and Services Group, which cuts a broad swath through Microsoft's tech empire: Office (all flavors), Skype, Bing, and much more. Nadella's reorg pulls Office out into its own group and puts an unexpected emphasis on AI in general and Cortana in particular.

Cortana and Bing (overseen by Derrick Connell) go to a new AI and Research Group -- where they belong -- with MS Research, Information Platform (David Ku's realm), and Robotics (headed up by Vijay Mital). All of them will be under Harry Shum, who is executive VP of technology and research. It's not clear to me if Shum will continue to be directly responsible for the MS Research team. He was in charge of Bing search from 2007 to 2013, and he's been in charge of MS Research since then.

In a move that surprised me, Rajesh Jha was put in charge of a new Office Products Group, and the whole group was elevated to report directly to Nadella. Yesterday, Jha was in charge of Office 365, Exchange, and the many flavors of Outlook, reporting to Lu, a position he took in May 2014. Now he has Office, OneNote, Skype ... the whole thing.

More surprising, Gurdeep Singh Pall is out as the head of Skype, with no word as yet what he'll be doing next. Nadella says, "Gurdeep will transition the Skype team to Rajesh over the coming weeks," but it isn't clear who will be in charge of Skype.

Expect more transcontinental churn. Julie Larson-Green remains as the Chief Experience Officer for the Office group and runs the Office Experience Organization, but now reports to Jha instead of Lu. Eran Megiddo remains in charge of OneNote, Wunderlist, and Education, while reporting to Jha instead of Lu.

Cortana should be dancing in the streets. With this reorg, Nadella puts considerable muscle and money behind his commitment to "the democratization" of artificial intelligence. (Sounds a whole lot better than "mobile first, cloud first," eh?) At least, Microsoft will give Google and Apple a good run for the money.

I offer obeisance to our emerging electronic overlords, but I wonder if they'll speak Microsoft.

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