Microsoft has selected an intelligent, well-liked, and technically savvy internal product guy — who might be considered by some as a little bland when compared to former CEO Steve Ballmer — as the company's next chief executive.
Satya Nadella, until being selected as CEO of Microsoft, headed up the company's cloud and enterprise division — which was arguably the revenue- and profit-driver for a company with its hands in just about everything. Before running that division, he ran Bing, the company's search engine, and eventually Microsoft's Servers and Tools division. Most of all, Nadella, who is 46 years old and married with three children, is known as an executive with a strong enterprise background, even though Microsoft is still developing products for consumers like Bing and Xbox.
"Today is a very humbling day for me," Nadella wrote in an email to employees. "It reminds me of my very first day at Microsoft, 22 years ago. Like you, I had a choice about where to come to work. I came here because I believed Microsoft was the best company in the world."
Moving forward, the discussion will likely shift to how involved founder Bill Gates will be as Nadella takes over. Microsoft, as part of appointing Nadella, has replaced Gates as chairman with former vice president at IBM, John Thompson.
"I've asked Bill to devote additional time to the company, focused on technology and products," Nadella said in his letter. "I'm also looking forward to working with John Thompson as our new Chairman of the Board."
Earlier, it was expected that Gates would move to be more involved in products, according to an earlier report by Bloomberg. That would make sense, given that Gates — while still the company's largest individual shareholder — has been methodically selling his stock through Cascade Investment.
Still, Gates is the founder of the company, and will likely remain involved, even if his full-time job is running the Bill & Melinda Gates foundation. "He cares very much about Microsoft and he'll always have something interesting to say, but his passion is trying to save the world," said Norman Young, senior equity analyst at Morningstar.
Nadella, if anything, is well liked at the company and was considered for a while to be one of the best of the internal candidates, possessing a strong technical acumen separating himself from Ballmer, who was considered a master salesman. He has a Bachelor of Engineering in electronics and communications, as well as a Master of Science in computer science from University of Wisconsin-Milwaukee and an MBA from University of Chicago.
Soft spoken and charismatic, Nadella managed to navigate his 20-plus-year tenure at Microsoft without becoming a polarizing candidate at any point. And when it comes to rallying Microsoft, which is still trying to find its identity in the current decade, he is certainly capable," Young said.
"He does have those intangibles, he is able to rally the troops, he has a keen mind for strategy and the operating stuff that people aren't giving him credit for," he said. "It helps to have a guy who has been in the trenches when you are running a company like Microsoft."
Nadella was one of many internal candidates, as well as a few external ones that at one point ballooned to a half-dozen or so vying for the role. That included the likes of Ford's Alan Mullaly, who helped Ballmer rope together the "One Microsoft" strategy and was seen as a leader who could wrangle the huge company, as well as former Microsoftie and Nokia exec Stephen Elop, who famously considered, if he were to become CEO, spinning down Bing and selling off the company's Xbox division.
"I'd say our current challenge and our current opportunities are the following," Nadella said in an interview with GigaOm last year. "You look at, let's divide it into two parts, on the enterprise side I actually think we're playing offense."
Nadella's appointment brings to a close the extended search for a CEO candidate, which included leaks from board-level discussions on an almost daily basis. The search began in the middle of a reorganization which included promotions for several key executives and a revamp of the organizational structure of the company to make the company more collaborative. Nadella, seen as one of Microsoft's own among developers and employees alike, will face the test of following through with reorganizing the company of 10,000-plus employees.
In that same interview with GigaOm, Nadella actually pointed to Microsoft's strategy as a "devices and services" company as a challenge that could prove to make Microsoft more valuable while the company's enterprise divisions are "playing offense."
"The downside is he does not have a lot of experience on consumer and devices side of the business, which is an important part of Microsoft," Young said. "When you look at what's really driving the growth and profit margins, it's the enterprise business. He's an insider, so it'll be a fairly painless and quick transition."