Sinofsky's product development duties effective immediately fall to Microsoft Vice President Julie Larson-Green who worked under the former Windows boss. Larson-Green inherits responsibility for Windows at a time when Microsoft is transitioning to the so-called post-PC era where your desktop, tablet, television, and smartphone are all tied together via online services.
[Read: Text of Steve Ballmer's letter about Steven Sinofsky departure]
It's too early to blame Sinofsky's departure on a poor reaction to Microsoft's products as Windows 8 was released to the public less than three weeks ago. Despite a tepid reaction to Surface RT and an uncertain future for Windows, most critics believe the end of Sinofsky's tenure was largely a result of political infighting.
Sinofsky in a letter to employees--as published on Paul Thurrot's Supersite for Windows--said his departure was "a personal and private choice." Microsoft says Sinofsky's exit was a mutual decision between the former Windows head and the company.
Nevertheless, many reports claim that Sinofsky was a divisive and uncooperative figure inside Microsoft, which may have ultimately caused his undoing.
Microsoft has a reputation for being a loose collection of warring fiefdoms; however, the company is increasingly focused on inter-departmental cooperation and product integration. "Our overall business strategy [is] to provide integrated product and service offerings, and this requires deeper cross-organization collaboration," Microsoft said in a recent proxy statement to the Securities and Exchange Commission.
And, as ZDNet's Mary Jo Foley pointed out, in a letter to employees explaining Monday's executive shuffle, Microsoft CEO Steve Ballmer hailed Larson-Green's "ability to effectively collaborate and drive a cross-company agenda."
Sinofsky's legacy; Larson-Green's challenges
Where Sinofsky helped create Windows 8, championed the Surface tablet, and is credited for making sure software shipped on deadline at Microsoft, Larson-Green's road ahead will be bumpy.
Her job will be to design "future Windows product development in addition to future hardware opportunities," according to Microsoft.
Larson-Green's gargantuan challenge is to help Microsoft retain 1.3 billion Windows users as the siren song of Android smartphones and Apple tablets continue to lure them away. In 2011, Windows OS sales brought Microsoft $11.5 billion in revenue.
If people forgo upgrading to Windows 8 or make the decision to buy a new Apple iPad instead of a Surface tablet, all of a sudden Larson-Green's new job becomes Ms. Fix-It, cleaning up after Sinofsky's best efforts.
Sinofsky's goals of offering tightly integrated Microsoft software and services with Windows 8 and Surface are in line with the current trends among most major consumer technology companies. With every release cycle, Apple more deeply integrates its Mac and iOS devices with iCloud, the company's online storage, sync, and file-sharing service.
Google marries the Android and Chrome OS platforms to the search giant's wide variety of online services including Gmail, Google Docs, Google+, Maps, and local search. Even major Windows PC manufacturers such as Acer and Lenovo are creating cloud-based sync solutions in an attempt to offer services integrated with their own hardware.
Sinofsky made sure Windows 8 offered a strong start for Microsoft's software-integration plans. The new OS ties many of the company's products together including Bing, SkyDrive, Outlook.com, Xbox entertainment services such as games, music and video, and Windows Phone 8.
The company also is transitioning Microsoft Office from desktop-bound software to subscription-based, cloud-supported software that you can install on up to five different devices. Rumored versions of Office for Android and iOS are also expected to appear soon.
Now it's up to Larson-Green to go beyond deeper software integration.
In early 2013, Microsoft will unveil another version of its Surface tablet based on Windows 8 Pro. And there are also rumors the company will produce its own Windows Phone hardware. It's not clear if Microsoft plans to jettison its software focus in favor of an Apple-style hardware business model. Perhaps the company is just borrowing from Google's playbook by creating so-called "flagship products" that set the tone for what a Windows 8 and, in the future, a Windows 9 device should look like.
Whatever Microsoft's hardware plans are, Larson-Green and Microsoft's biggest challenges are to keep the Windows platform relevant by offering a wide variety of tightly integrated services and hardware. If Larson-Green can pull that off, she just might convince users turning away from PCs and towards tablets to stick with Windows over Android or iOS.
PCWorld's Tom Spring contributed to this report.