In Latest Shakeup at Microsoft, Reller and Bates Reportedly Out

In Latest Shakeup at Microsoft, Reller and Bates Reportedly Out

Capossela is promoted, Penn in lateral move

According to two separate reports that cite anonymous sources, two senior Microsoft executives are leaving the firm as the result of a reshuffling of responsibilities. It's the first major change at the firm since Satya Nadella took over at Microsoft but the latest in a long line of corporate changes that make it difficult to keep score.

Related: "Massive Microsoft Reorg Might Not Be Enough"

According to reports in Recode and The New York Times, Mr. Nadella informed his direct reports of the changes on Friday and was planning to publicly announce them Tuesday. Because this shakeup involves three of the executive vice presidents who report directly to him—from a field of 12—it's a major development.

Here's what's reportedly happening.

Reller out, Capossela in. Microsoft Executive Vice President of Marketing Tami Reller is leaving the firm and will be replaced by Chris Capossela, who will also pick up advertising duties.

Bates out. Microsoft Executive Vice President of Business Development and Evangelism and former Skype CEO Tony Bates is leaving the firm. Eric Rudder, who currently leads Microsoft's advanced strategy group, will temporarily fill this role until a replacement can be found.

Mark Penn in lateral move. Mark Penn, who previously led an Advertising and Strategy group, will now lead a new Strategy group.

A few notes about these changes.

Mr. Bates was reportedly on the short list to become the new Microsoft CEO, though Skype's inability to integrate cleanly with Microsoft's other platforms should have been a warning signal to everyone involved. After he was passed over, many assumed he would leave the company quickly, so his departure is no surprise.

Reller's departure is more surprising to me, though some insiders who contacted me over the weekend suggested she was in over her head in a company-wide marketing role. I didn't see it this way: In the post-Sinofsky Microsoft world, Reller emerged as a transparent and clear speaker about the firm's plans, especially for Windows. Fortunately, her replacement is rock-solid: At one time, I had expected Mr. Capossela (a veteran of Microsoft's Office group) to take over that business.

Mark Penn is controversial in some circles because of his political strategy background, and critics point to his "Scroogled" ad campaign as negative, although those advertisements raise legitimate issues about a competitor's products. More recently, however, Mr. Penn was responsible for the widely admired "Empowering" TV ad that first appeared during the Super Bowl, and it's possible that Mr. Nadella wanted Penn to focus on new product strategies.

Microsoft has so far declined to comment on these reports, but it's possible the leaks will force the company's hand and trigger an earlier-than-expected public announcement.

Related: "Microsoft Announces Sweeping Reorg"

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