Microsoft narrows hunt for new CEO: Mulally, Elop on the shortlist

Microsoft has narrowed down the search for its CEO with the list of external candidates now down to five. Among the candidates who’ve made that shortlist, reports Reuters, are Ford CEO Alan Mulally and ex Nokia CEO Stephen Elop.

The news agency reports that the Redmond-based software giant also has three internal candidates including former Skype CEO turned Microsoft business development chief Tony Bates and cloud and enterprise boss Satya Nadella.

Microsoft has been searching for a new CEO since Steve Ballmer announced his retirement back in August. The people figuring out who will take charge of the company include John Thompson, the board’s lead independent director, Microsoft founder Bill Gates, chairman of the audit committee Chuck Noski and chairman of the compensation committee Steve Luczo.

The shortlist is significantly smaller than the 40 or so candidates the board was believed to have been looking at when Ballmer announced his retirement, but it seems that it’ll still be some time before we find who’s going to step into Ballmer’s shoes.

While Reuters’ sources would not name the other candidates, the company is believed to be looking at people from a wide range of sectors including life sciences and the consumer space.

Microsoft meanwhile refused to comment on the process and Ford apparently remains confident that Mulally will remain with it until the end of his contract in 2014. Ford spokesman Jay Cooney said: “There is no change from what we announced last November. Alan remains fully focused on continuing to make progress on our One Ford plan. We do not engage in speculation.”

While Reuters reports that Microsoft investors are keen for the company to appoint a CEO who can turn the company around, as Mulally has done with Ford over the past few years (saving it from having to accept a government bailout), there are others who think he’s exactly the wrong person for the job.

Businessweek’s Diane Brady for instance cites, among other things, Mulally’s age and the perception that he is the antithesis of the “cool” image Microsoft’s been trying to cultivate in recent times.

Forbes’ Eric Jackson meanwhile points out the giant grey pachyderm in the room, namely that Mulally has zero software experience. Sure Ford has a research centre in Silicon Valley and cars are becoming increasingly like gadgets, but the fact is they’re still very large machines produced and assembled in factories.

Elop meanwhile appears to have played the corporate game perfectly, leaving Microsoft for Nokia before proving all the “Trojan Horse” skeptics right and selling the Finnish phone maker to Microsoft for €5.4-billion.

That said, his time at Nokia was largely spent cutting costs and shrinking down the company. As Zdnet’s Jason Hiner points out, that means Microsoft would be risking the wrath of Wall Street if it appoints him CEO.

Another thing worth considering is that Microsoft’s decision whether or not to stick to the strategy laid out by Ballmer could ultimately decide who it chooses to take over his position.