So far, the response has been generally positive among current employees.
"This is probably one of the most, if not the most, significant reorgs in the company's history with a new EVP [executive vice president] owning multi-billion dollar businesses and breaking up the largest legacy businesses," said an employee who's getting moved into one of the two expanding engineering groups.
"If there's one thing about Satya, he's not afraid of making fundamental, disruptive changes to support his vision."
Nadella has been talking about the emergence of a "cloud-first" world since he replaced Steve Ballmer as the head of Microsoft in 2014. This reorganization makes Microsoft even more focused on cloud services across the board.
In particular, now there's an executive vice president -- a top Microsoft leadership position -- just for Azure. That person, Jason Zander, will be reporting to Guthrie, who will be executive vice president for the expanded Cloud and AI Platform group, a Microsoft spokesperson told CNBC in an email.
Azure is second to only Amazon Web Services in the public cloud market. While Amazon had 34 percent of the cloud infrastructure services market in the fourth quarter, Azure had 13 percent, more than Google and IBM, according to Synergy Research Group.
One person in the Azure organization said they approved of the changes.
At the same time, one of Microsoft's most seasoned leaders is stepping away.
"I liked Terry a lot," said an employee who worked in Myerson's organization. "He was abrasive and headstrong, which rubbed people the wrong way. But I enjoyed working with him and definitely disappointed that he's leaving."
Microsoft announced a similarly sweeping sales reorganization last year, bringing in more technical salespeople and focusing more on getting customers to use cloud services. Today many people inside Microsoft feel those changes were smart.
But ultimately, both reorganizations bolstering Microsoft's cloud push. It's not a major change in direction, at least as Garnter analyst Anderson -- himself a former Microsoft employee -- sees it. Windows can now become a bigger part of the cloud narrative for Microsoft, and it will become more integrated with software in offerings like Microsoft 365.
"I don't think Steve Ballmer could have maybe made this change with the same credibility," Anderson said. "I think this has been Satya's role to play, and he's done it well."
--Todd Haselton contributed to this story.
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