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Satya Nadella to Replace Steve Ballmer as Microsoft CEO

The new head has a strong engineering background, with 22 years at Microsoft.

In a move that should cheer developers, Microsoft has named as its new CEO the former president of its Server and Tools division.

Satya Nadella will be the third CEO in the company's history. Bill Gates will step aside as chairman but will serve as a technical advisor. Director John Thompson will replace Gates as chairman. Nadella takes over as CEO immediately.

Reports that the search was winding down and that the two would be named to take the company forward at a critical juncture in its history surfaced late last week. It was looking probable in recent days that Microsoft indeed was set to give Nadella the nod. But given the fits and starts of the search over nearly six months, there was reason to wonder if the decision was certain.

Gates future role with Microsoft was also in doubt, given his full-time commitment to his charitable trust, the Bill and Melinda Gates Foundation. But Gates will step down as chairman and take on the new board position of founder and technology advisor. In that new roll the company said he will spend more time with the company working with Nadella to develop technology and product direction. It remains to be seen how much more involved Gates becomes.

Despite calls for outside blood to take over Microsoft, in the end the company found it had the best candidate from within. "During this time of transformation, there is no better person to lead Microsoft than Satya Nadella," Gates said in a statement. "Satya is a proven leader with hardcore engineering skills, business vision and the ability to bring people together. His vision for how technology will be used and experienced around the world is exactly what Microsoft needs as the company enters its next chapter of expanded product innovation and growth."

Since Ballmer announced he's stepping down back in August, Nadella was always considered a candidate, though at first he was considered a long shot. However, over time his prospects seemed to improve thanks to his 22-year tenure with Microsoft working in wide number of groups including overseeing its Bing search engine, its Office business and most recently overseeing its enterprise tools infrastructure and cloud business. Unlike Ballmer, who was regarded more for his business and marketing acumen, Nadella is an engineer and computer scientist who also has broad awareness of how technology is applied to business and is seen as having a vision for the future of consumer and enterprise IT.

Nadella also is known to spend a lot of time in Silicon Valley, which should help bring Microsoft into the mainstream of the technology market. His ties to the region promises to help recruit key partners and talent to move Microsoft forward.

When Nadella appeared at a Silicon Valley media event in September to talk about Microsoft's cloud strategy, it was clear the company was floating him as a candidate. But as Wall Street was pushing for an outsider to come in, the search focused on Ford CEO Alan Mulally and several others. It was never clear whether Microsoft offered the job to any of those candidates with the leading ones publicly bowing out.

Even though Nadella is widely respected, questions have persisted whether he could run a company with 100,000 employees  (and about 30,000 more due to come on board once Microsoft closes its deal to acquire Nokia). With former Symantec CEO Thompson stepping in as chairman and a strong CFO in Amy Hood, Microsoft believes the two will take some of that pressure off of Nadella.

In an e-mail to employees, Nadella emphasized the company's mobile and cloud-first transition. "While we have seen great success, we are hungry to do more," he noted. "Our industry does not respect tradition -- it only respects innovation. This is a critical time for the industry and for Microsoft. Make no mistake, we are headed for greater places -- as technology evolves and we evolve with and ahead of it. Our job is to ensure that Microsoft thrives in a mobile and cloud-first world."

Born in Hyderabad, India, Nadella has a master's degree in computer science from the University of Wisconsin and another master's degree in business administration from the University of Chicago.

In a video interview released by Microsoft, Nadella shared Gate's view that the company needs to have the goal to make profound changes. "Everything is becoming digital and software driven," he said. "I think of the opportunities being unbounded and we need to be able to pick the unique contributions that we want to bring. That's where our heritage of having been the productivity company to now being the do-more company where we get every individual and every organization to get more out of every moment of their life is what we want to get focused on."

Nadella's heritage at Microsoft overseeing enterprise infrastructure and productivity is also a sign the company won't lose sight of its bread and butter as it tries to develop new use cases for individuals and enterprises alike.

About the Author

Jeffrey Schwartz is editor of Redmond magazine and also covers cloud computing for Virtualization Review's Cloud Report. In addition, he writes the Channeling the Cloud column for Redmond Channel Partner. Follow him on Twitter @JeffreySchwartz.

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