Microsoft sees software as a service as a part-answer to the maturing software market.
Microsoft's engineers have been griping about too much bureaucracy, and this reorganization runs counter to it. It is bound to cause some discussion among employees as you are essentially putting a business manager on top of a very technical group.
Its engineers have not necessarily proven that they can ship software on time. Maybe Microsoft needs less heroic engineering and more of a business focus.
There was a perception that a major change had to happen.
The rumored deal would disappoint Microsoft.
Windows is Microsoft's biggest business unit, and Vista is it's biggest challenge. Frankly, I think it's going to be very difficult for Microsoft to make its case to corporations.
Microsoft is maturing, and they really need marketing and sales people at the top, but I am not sure employees want to hear [that].
Because of the development cycles, it has become less and less attractive for enterprise customers to buy a contract where you are effectively pre-paying for the next version.