Microsoft has announced a reshuffle of its Windows business, two days after it shocked the market by announcing a delay to Vista, the long-awaited next update to the company’s flagship computer operating system.

Eight key executive positions have been changed, while the company has also announced a string of other changes and appointments in areas ranging from online advertising to Microsoft's Origami project - an "ultra mobile" PC that could potentially rival the iPod - will be charged with heading off competitors such as Google and Apple.

Kevin Johnson, co-president of Microsoft’s Platforms and Services Division, which includes the Windows business, said changes at the division would "enhance the leadership team and structure … to ensure we have the right organization to support our technology vision".

Steven Sinofsky, from Microsoft’s Office software business, will immediately take control of Windows development, which accounts for the largest portion of Microsoft’s profits but has been beset by a string of missed deadlines. Jim Allchin, the current head, retires next year.

Mr Sinofsky will be the heart of Microsoft’s efforts to fight off intense competition from Google and Yahoo in the rapidly changing technology market. He will play a central part in the Microsoft’s Windows Live project, which will see Windows software offered over the internet, rather than as an applications stored on a PC's hard-drive.

The successful roll-out of Windows Live is seen as essential for Microsoft, which has been fiercely criticised for failing to spot the full potential of the web.

The latest changes came after Microsoft moved to streamline its structure by scaling down seven divisions to three last year. Joe Wilcox, a business analyst with Jupiter Research, said that changes announced overnight were likely to be followed by further reshuffles at Microsoft's Business and Entertainment units.

"It's sensible to assume that the top executives will make changes over time. These three groups are still fairly new and brought together other divisions, many of which hadn't closely worked together before," he said on his Microsoft Monitor blog.

Earlier this week, Microsoft said the consumer launch of the new Windows would be delayed until January 2007. The setback means the product will not be available during the crucial Christmas sales period and came as a blow to computer manufacturers and retailers who face the prospect of consumers delaying making purchases until the new product is released.

The company later added that the next version of Office would also be pushed back to coincide with the launch of Vista. The delay would avoid consumer confusion, it said.

"Unlike Windows Vista, I don't see any major disturbance caused by 2007 delivery of next Office version," Mr Wilcox said.

"My expectation is a convergence around Windows Live, Office Live, Windows Vista and Office 2007. There will be some interesting integration points between the services and desktop software and between next versions of Windows and Office."

Despite the Office delay, Mr Sinofsky has a reputation for bringing in projects on time, Microsoft observers say. He will be charged with ensuring future upgrades to Windows run smoothly.

"The Office group is known for running a pretty tight ship, so if he can bring more discipline, that could be very beneficial to future versions of Windows," Mr Wilcox told Reuters.

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