Sinofsky's duties were reassigned to Julie Larson-Green, who will take charge of all software and hardware for Windows, and Tami Reller, who will add oversight of the Windows business to her responsibilities in marketing and finance, Redmond-based Microsoft said Monday in a statement. Both will report directly to Ballmer, effective immediately.
The company had grown concerned about Sinofsky's ability to get along with other senior managers at a time when Microsoft needs more cross-product coordination, the people said. Ballmer is putting in place a new team to start planning the next upgrade fresh on the heels of the release of the latest version of Windows. The moves underscore pressure on Ballmer to fight back against Apple and other mobile device makers that are winning over customers.
"We hold Sinofsky in high regard as a technical visionary and his ability to deliver complex products on a timely basis," Rick Sherlund, an analyst at Nomura Holdings, wrote in a research report. "Microsoft's press release implies some tension within Microsoft and references the need for collaboration."
Sherlund compared Sinofsky's exit to that of Scott Forstall, who is departing Apple after struggling to collaborate well with his fellow senior executives.
Sinofsky didn't respond to a request for comment.
A 23-year Microsoft veteran, Sinofsky is departing less than a month after the release of Windows 8, the latest version of the computer operating system, and Surface, the company's first foray into the tablet-hardware market. The timing of his move is unrelated to the quality of the products or their reception in the market, said one person, who asked not to be identified because the matter is private.
While Sinofsky had his protégés and devotees, he often locked horns with people outside his inner circle, said the people, who asked not to be identified because they're not authorized to speak publicly about it. He sometimes rebuffed requests from senior leaders, including Ballmer, if they didn't mesh with his plans, these people said.
As head of the group that crafted the tablet, Sinofsky refused to show the device to other teams and even CEO Ballmer until very close to its completion, one person said. Ballmer had been concerned for years about Sinofsky's tussles, including with Chief Software Architect Ray Ozzie, who left in 2010. Ballmer set those aside to get Windows 8 finished, the person said.
Sinofsky's prickly tendencies extended to partners. The executive went so far as to call executives at other companies to complain over interviews they gave, one of the people said.
Still, Sinofsky's departure leaves Microsoft without another senior leader who has shaped much of the company's engineering strategy in recent years. Besides Ozzie, other senior executive departures in recent years include Bob Muglia, J Allard and Robbie Bach.
"One of the main things you lose by not having Steven Sinofsky there is having a person who has 20-plus years experience in and around the company as a leader and as somebody who has shipped products reliably," said Wes Miller, an analyst at Directions on Microsoft, based in Kirkland. "Windows 8 and Windows RT and Surface have not yet proven themselves in the market so it's just unusual and a little disconcerting."
Sinofsky, who joined Microsoft in 1989, had spent most of his career working on the Office suite of products until he shifted to Windows in 2006. He stabilized that division after Vista, an earlier iteration of Windows, met with poor reception.
Once considered a possible successor to Ballmer, Sinofsky more recently had failed to stem the loss of PC customers to rivals, including iPad maker Apple. Revenue at the Windows division had fallen short of analysts' estimates in six of the past eight quarters amid lackluster demand for PCs and a shift in consumer preferences toward handheld devices.
He didn't receive all of his bonus for fiscal 2012 in part because a 3 percent decline in sales at the Windows division and the company's failure to meet requirements of a 2009 agreement with the European Commission, according a regulatory filing last month.
Larson-Green, who joined Microsoft in 1993, had been vice president of program management for Windows and was one of the executives who came to the division with Sinofsky from Office.
Already one of the highest-ranking women at Microsoft, Larson-Green led the team that overhauled the design of Windows 8, opting for a start screen with tiles similar to the look of Windows Phone and eliminating iconic elements like the start button. Before that, she remade the look of Microsoft's Office software for businesses by switching from drop-down menus to a bar across the top called the ribbon. Larson-Green was in charge of all program management, design research and development of all international releases for Windows 8.