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Nadella Named Microsoft CEO, Gates Out as Chairman

Microsoft on Tuesday officially appointed Satya Nadella to be its third CEO, ending the almost six-month search for a replacement for outgoing CEO Steve Ballmer.

Nadella will take over as CEO effective immediately, Microsoft said in its announcement.

Additionally, Microsoft announced that Bill Gates will step aside as chairman of Microsoft's board and take on the new board position of Founder and Technology Advisor. Under his new role, Gates will spend more time with the company working with Nadella to develop technology and product direction, Microsoft said. Director John Thompson will replace Gates as chairman.

"During this time of transformation, there is no better person to lead Microsoft than Satya Nadella," Gates said in a prepared 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."

Nadella's appointment comes after reports surfaced late last week that Microsoft's CEO search was winding down and that the company would give Nadella the nod, despite calls for an outside candidate to take over Microsoft. Since Ballmer's retirement announcement in August, Nadella was frequently mentioned as a contender for the CEO role, though at first he was considered a long-shot.

Over time, Nadella's prospects seemed to improve. His 22-year tenure at Microsoft included stints in a wide variety of product groups, as well as overseeing Microsoft's Bing search engine, its Office business and, most recently, 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 a 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 be a boon to Microsoft's efforts to recruit key partners and talent.

When Nadella appeared at a Silicon Valley media event in October to talk about Microsoft's cloud strategy, it was clear Microsoft was floating him as a candidate. However, with Wall Street 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, several of whom later publicly bowed out.

Even though Nadella is widely respected, questions about whether he can run a company with 100,000 employees (and about 30,000 more coming once Microsoft closes its deal to acquire Nokia) have persisted. With Thompson, a former CEO of Symantec, 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 Gates' 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 -- [that] is what we want to get focused on."

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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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