Elop had left Microsoft once before to run Nokia, then returned when Microsoft bought the Finnish company's smartphone business for $7.5 billion last year. Analysts said his departure now is a sign that Microsoft is rethinking its approach to the phone business, where it has struggled to make a profit despite recent layoffs and other spending cuts.
Also leaving the company is
In an email to employees on Wednesday, Nadella praised the departing executives and said the reorganization will help Microsoft focus on building "services and platforms for the mobile-first, cloud-first world."
Microsoft said the "devices group" run by Elop will be folded into a new division run by Terry Myerson, an executive vice president who will also continue to oversee the company's flagship Windows operating system.
Nadella has pushed Microsoft to produce more software for mobile devices, while scaling back the smartphone hardware business since the Nokia acquisition, which was negotiated by his predecessor as CEO,
Elop was once considered a possible successor to Ballmer, but the top job went to Nadella. Elop's departure now is further evidence that Nadella felt the strategy behind the Nokia acquisition "was clearly not heading down the right path," said investment analyst Daniel Ives of FBR Capital Markets, in an email.
Other executives will take over operations led by departing managers Kirill Tatarinov and Eric Rudder.
Nadella said Penn's departure as "chief insights officer" was unrelated to the company's reorganization. He said Penn is leaving in September to form a private equity fund.