Microsoft is reuniting its Windows engineering teams into a single organization under Pavan Davuluri, President of Windows and Devices. The move, announced internally, reverses a 2018 split to accelerate the company’s development of an AI-powered “Agentic OS.”
The internal announcement on a Tuesday in 2025 detailed the consolidation of the Windows client and server teams, a move designed to sharpen focus and streamline development. In an internal memo, Davuluri articulated the strategic thinking behind the decision. “This change unifies Windows engineering work under a single organization,” he stated, emphasizing the goal of bringing greater cohesion to the development process. He further explained the operational benefits, noting,
“Moving the teams working on Windows client and server together into one organization brings focus to delivering against our priorities.”
This reunification is explicitly intended to break down the organizational silos that have existed for years, creating a more efficient and integrated engineering structure for the company’s flagship operating system.
This decision unwinds a significant and controversial reorganization that occurred seven years prior, in 2018. That structural change followed the departure of Terry Myerson, the former head of Windows. In the wake of his exit, Microsoft split its Windows engineering teams, a move that shifted the core platform engineers into the company’s Azure cloud division. This created a distinct structural divide between the foundational elements of the operating system and the teams responsible for its user-facing features and experiences. The separation was a source of internal fragmentation, complicating efforts to align the evolution of the core platform with the user experience layer that sits on top of it.
An attempt to partially bridge this divide was made in 2020 with the formation of a new “Windows + Devices” division, which was placed under the leadership of Panos Panay. Panay, who had a background in Microsoft’s hardware development, advocated for tighter coordination between software and hardware. At the time, he argued that “designing hardware and software together will enable us to do a better job on our long-term Windows bets.” Under his leadership, he successfully reclaimed some developer and fundamentals teams from the Azure division. However, the core engineering groups responsible for the deepest layers of the operating system remained separate. The new reorganization announced by Davuluri completes the reunification process that Panay began, placing the vast majority of Windows development squarely under his leadership. Only a small number of low-level teams, specifically those working on the kernel and the Windows Subsystem for Linux (WSL), will remain within the Azure Core organization.
The principal motivation for this comprehensive reunification is Microsoft’s aggressive strategic push into artificial intelligence. Davuluri explicitly connected the new organizational structure to the company’s forward-looking product roadmap. His memo stated that “this reorg will help deliver our vision of Windows as an Agentic OS.” This concept of an “Agentic OS” describes a future version of Windows that functions more proactively and intelligently. It is envisioned as an operating system that can anticipate what a user needs and automate complex, multi-step tasks, fundamentally evolving the user interface beyond traditional point-and-click interactions. Achieving this sophisticated level of functionality requires a deep and seamless integration between the core operating system, the AI models, and the user-facing applications. Such integration is significantly more challenging to execute when key engineering teams are separated by organizational boundaries.
This Windows reorganization is the latest in a series of strategic consolidations at Microsoft, all designed to centralize and focus the company’s extensive AI efforts. This wider pattern reflects a sense of urgency articulated by CEO Satya Nadella, who remarked earlier in the year that because of AI’s rapid impact, “thirty years of change is being compressed into three years.” A major step in this consolidation was the January 2025 creation of the CoreAI division, led by Jay Parikh, which was established to unify disparate AI tools and platforms such as GitHub Copilot and Azure AI. The strategy was further advanced in August 2025, when the entire GitHub organization was moved under the CoreAI umbrella following the departure of its CEO, Thomas Dohmke. By bringing its Windows engineering teams back together, Microsoft is aligning its most widely used product with this central AI strategy, positioning the operating system as a critical delivery vehicle for its most advanced AI technologies and aiming to secure its relevance for the next decade.
