For Washingtonians, Penn's appointment is of particular interest, given his time on the Clinton presidential campaign and his subsequent resignation after his public relations work raised conflict-of-interest issues. During his year and half at Microsoft, he has helped the firm use his penchant for negative advertising against tech competitors.
None of the moves are that surprising, said IDC analyst Al Hilwa. Bates, formerly chief executive of Skype before Microsoft bought the firm in 2011, was seen as a strong internal candidate for CEO ahead of Nadella's appointment. He was not expected to stay long after being passed over for the position, Hilwa said.
As for Reller, who has been with the company since 2001, Hilwa said she may be a victim of the firm's inability to pick up customers with its latest operating system, Windows 8.
"The folks spearheading the advertising strategy appear to be affected as the campaign for Windows 8 was probably considered not a great value for the money," Hilwa said. "It's a product issue, but very often the marketing, advertising and PR take hits in an engineering company."
Penn originally came to the firm 18 months ago, at the request of then-chief executive Steve Ballmer, to focus on Microsoft' Web search engine, Bing. He used his hardball political skills to launch an anti-Google campaign called "Scroogled," which raised questions about Google's privacy practices -- and also raised eyebrows for its negative tone. Penn added advertising duties to his job eight moths ago.
When Ballmer announced a major Microsoft reorganization in July, Penn was asked to help remake the company's image as a devices and service company and was central to developing the firm's heartstring-tugging Super Bowl ad.
In a release, Nadella said Penn will continue to report to him and to research where Microsoft's next opportunities lie. "His focus on using data to quickly evaluate and evolve our campaigns has driven new insights and understanding," Nadella said. "Mark and his team also will continue to provide input in the area of competitive research and analysis."
A source close to the company said that Nadella trusts that Penn's data-driven tactics and reputation as a fast mover will bring much-needed changes to the company. Microsoft needs to move quickly to make its mark in the mobile and cloud-software space as demand for desktops and laptops continues to slide.
That means more shakeups are likely soon, Hilwa said, though consumers may not see many changes in products until the last projects of the Ballmer regime run through the pipeline.
"Satya will have to put his mark on the organization somewhere," Hilwa said. "We should expect changes, no doubt."