Microsoft CEO Steve Ballmer has relieved Andy Lees of his duties as president of the software giant's struggling Windows Phone Division. The change was revealed to employees today via email.

"I have asked Andy Lees to move to a new role working for me on a time-critical opportunity focused on driving maximum impact in 2012 with Windows Phone and Windows 8," Ballmer wrote in the email memo, which was first reported by AllThingsD. "We have tremendous potential with Windows Phone and Windows 8, and this move sets us up to really deliver against that potential."

Little is clear in the aftermath of this move. Thus far, at least, the Windows Phone Division is not getting a new president. Instead, Corporate VP Terry Myerson will expand his responsibilities to include business development and marketing, the memo notes. Previously, Myerson was in charge of Windows Phone engineering. Sources tell me that Myerson will, however, take control of the Windows Phone Division, and that Microsoft isn't bringing anyone else in to replace Lees.

As for Lees, Ballmer had nothing but praise.

"In the three years Andy has been leading the phone group, we've come a long way," the memo reads. "We reset our strategy, built a strong team that delivered [Windows Phone 7] and [Windows Phone 7.5] and created critical new partnerships and ecosystem around Windows Phone. That is a ton of progress in a brief period of time, and I'm excited for Terry and team to keep driving forward and for Andy to dig into a new challenge."

There's been a lot of speculation that Microsoft will be basing the next major version of Windows Phone on Windows 8, and perhaps that is the "new challenge" that Ballmer is referring to. Certainly, a stripped-down version of Windows used on phone handsets would create some unique challenges, not the least of which is backward compatibility with previous Windows Phone apps and games.

Lees always struck me as a curious choice as Windows Phone head, and in a May 2011 appearance previewing what became Windows Phone 7.5, he came off as somewhat detached. Previous to this gig, Lees worked in Microsoft's Server & Tools marketing business. He is a 21-year Microsoft veteran.