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Microsoft saying goodbye to server chief Muglia

In an email message to employees, Microsoft CEO Steve Ballmer announced that the head of the company’s Server and Tools business, 23-year veteran Bob Muglia, would be leaving the company this summer. The move is unexpected in part because Microsoft’s Servers and Tools business has been growing steadily, accounting for almost $15 billion in 2010—including $5.5 billion in operating profit, even in the face of solid competition from firms like Oracle and IBM. Alongside Windows and Office, Servers and Tools is the third largest business within Microsoft’s operations.

Microsoft has not named a replacement, but Muglia will be staying with the company through the summer to ease the transition.

“This is simply recognition that all businesses go through cycles and need new and different talent to manage through those cycles,” Ballmer wrote. “Bob has been a phenomenal partner throughout this process, and he and his leadership team have the right strategy in place.”

Microsoft’s Server and Tools business consists of products like Windows Server, SQL Server, and the company’s growing arsenal of virtualization tools. However, as strong as the company’s existing business is, Microsoft is pushing hard to transition to a cloud-based computing services business with its Azure cloud platform, and some industry watchers have suggested CEO Ballmer did not feel Muglia was the right person to transition the server business towards Azure.

Muglia’s pending departure is the latest in a string of high-level executive defections from the Redmond software giant. Last September, Stephen Elop left to take the CEO position at Nokia, and Entertainment and Devices president Robbie Bach departed at 22 years with the company. In late 2010 Bill Gates’ successor as chief software architect Ray Ozzie announced he was leaving the company, and a little over a year ago Microsoft CFO Chris Liddell stepped down.

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