Microsoft’s product chief, who had led the tablet and mixed reality businesses, steps down in a blow to the company’s hardware ambitions

Panos Panay will stay long enough to help his replacements transition into the role, Rajesh Jha, executive vice president of the experiences and devices group, announced in an email to employees on Monday. 

Panay, who had been with Microsoft since 2004, was central to the company’s hardware efforts in his role leading the Surface computer division and most recently heading the Windows unit. Pavan Davuluri is being tapped to oversee operating systems, devices and chips related to desktop clients, cloud and artificial intelligence. Yusuf Mehdi will work with computer-maker and retail partnerships, Jha said.

“Thank you, Panos, for your impact on our products, culture, company, and industry over the past two decades,” Chief Executive Officer Satya Nadella said in a statement, adding that the company will “remain steadfast and convicted in our strategy.”

Panay served as general manager for Surface when the initial tablets, Microsoft’s first piece of computer hardware, were introduced in 2012. Since then, he’s led an expansion into laptops, desktops and accessories. The devices attracted comparisons to Apple, thanks to glitzy launch events and a focus on detail and high-quality design.

More recently, Microsoft has scaled back the Surface operation, axing personnel and cutting slow-selling products. The company’s HoloLens mixed-reality goggles project, overseen by Panay since 2022, has also struggled, thanks in part to a delayed US Army contract.

The company’s “commitment” to Surface and the mixed-reality business “remains unchanged,” Jha wrote in his email.

Davuluri, a 20-year Microsoft veteran, is a vice president in Windows and Device engineering and has led silicon and systems integration. Mehdi has been at Microsoft for more than 30 years and first came to prominence as the head of marketing campaigns for Internet Explorer in the 1990s. More recently he has held roles at Xbox, Windows and Bing.