It was Nadella's predecessor Steve Ballmer, who acquired Nokia's handset business for $7 billion in 2013 in a bid to boost Microsoft's position in the smartphone market. Ballmer set former Nokia chief Stephen Elop as the man to make the magic happen at Microsoft and the magic never arrived. So Elop is out.

Back in 2007, Ballmer laughed at Apple's iPhone. Ballmer stated at the time that Apple "may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I'd prefer to have our software in 60% or 70% or 80% of them, than I would to have 2% or 3%, which is what Apple might get." Of course with Apple's iOS and Google's Android, Microsoft's Windows is lucky to have the 2 or 3% of the market. It's completely the reverse of what Ballmer laughed at Apple "might get." Ballmer laughs no more.

Years later Steve Ballmer admitted that "Microsoft Corp largely missed the mobile market in the last decade." Surely that was a tough pill to swallow.

Stephen Elop's role at Microsoft was Executive VP of Devices & Services business. The Windows Phone aspect of that division is now going to be a part of a new division headed up by Terry Myerson who is currently the Executive VP of Operating Systems.

The new division will be in charge of Windows and first-party devices including Surface tablets, HoloLens, Xbox and smartphones.

Bloomberg reports that "Myerson, 42, has been overseeing a Windows business that is facing a new reality among customers and at Microsoft. The operating system has lost most of its consumer-computing market share to tablets, phones and Apple Inc.'s Mac PCs.

Within Microsoft, Windows is attempting to find a role at a company that is focused on releasing its most popular applications -- the Office suite, for example -- to work on rival operating systems.

So far, he has worked on winning back corporate customers with a Windows revamp due out next month that restores some of the design elements popular among businesses. He also has added a new Web browser and unveiled ambitious projects like the HoloLens augmented-reality goggles and software. Myerson previously had oversight for phone, Xbox and HoloLens software. Now he gains the hardware as well.

Under Myerson, Microsoft has also been experimenting with new business models for Windows, making the operating system free on smaller tablets and phones and offering free upgrades to the coming update."

Taking on Apple and Google is going to be a daunting task for Myerson going forward. Yet Nadella believed the company needed fresh blood and bold thinking to take on that challenge. Changing the old guard is always the first step in corporate window dressing and today the spot light fell on Terry Myerson, who some say, is now the second most powerful figure at Microsoft after Nadella.

With Windows 10 going on sale on July 29, this was one of Nadella's last chances to change the face of Microsoft before a new chapter begins. Will Microsoft finally be able to put their long standing nightmare called Windows 8 behind them? Only time will tell.

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