The news that Bob Muglia is to leave Microsoft is raising plenty of questions as to why he’s leaving and who will replace him.

Muglia has a good reputation at Microsoft and across the industry as a manager with a clear idea of what the software in his division should do and where future developments should lead.

It does seem from Steve Ballmer’s memo that the decision was Ballmer’s rather than Muglia’s. Balmer says: "I have decided that now is the time to put new leadership in place for STB (Server and Tools Business). This is simply recognition that all businesses go through cycles and need new and different talent to manage through those cycles".

Muglia’s side of the story, given in his email to the employees in his division,  doesn’t give any reasons for leaving, but points out that the STB unit that Muglia has managed has performed well, with more than a 50% increase in revenue with a near doubling in income in the time Muglia has been manager.

Muglia was recently been responsible for the Azure element of Microsoft, as well as developer tools. While some commentators are speculating that his departure is related to his remarks about Silverlight at Microsoft’s PDC in November (it was Muglia who said HTML 5 is Microsoft's cross-platform strategy rather than Silverlight), it seems unlikely.

Comments in Muglia’s departure email sound more as though Ballmer and Muglia have differences over where Microsoft’s cloud business should go, and that Ballmer has decided he needs someone who will be more compliant in the role. Current front runner seems to be Amitabh Srivastava, who manages the Windows Azure unit in Microsoft, and who has been reporting directly to Muglia. Meanwhile, industry watchers are wondering where Muglia will reappear; a good manager with a strong grasp of servers and cloud computing would be attractive to many companies fighting for share in this sector.

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