Microsoft reportedly settles on Satya Nadella for CEO spot

If you’ve been paying attention to Microsoft’s quest for a new CEO over the past few months, you will have seen one name going from dark horse to serious contender. That name belongs to the company’s vice president of Cloud and Enterprise Satya Nadella and it looks like the Redmond-based giant has settled on him for its top job.

According to Bloomberg, at the same time as Microsoft announces Nadella as CEO, it will reveal a new chairman to replace Bill Gates.

People familiar with the matter say that Nadella emerged as the strongest candidate a few weeks back, but that the process is still being finalised.

We’ve already made the argument as to why Nadella makes sense as CEO, but his 21 years with the company suddenly seem a lot more important when you remember that Microsoft has only had two CEOs throughout its entire history: Gates and Steve Ballmer.

None of that however should take away from his engineering cred and his proven track record in enterprise — one of Microsoft’s most profitable divisions.

Appeasing investors

Gates’ replacement meanwhile will most likely be John Thompson, the company’s lead independent director. That makes sense, given that he’s been leading the search for the new CEO. It will however represent a seismic shift when Gates vacates the position he’s held since 1981.

It seems that the move is most likely a bid to appease investors. The logic’s fairly simple: if you’re going to have someone who rose through the ranks under Ballmer as CEO, then you need to have a more impartial outsider in the chairman’s spot.

“If they are going for the CEO who is right down the hall from Steve Ballmer, you’ve got to give investors a bone,” Daniel Ives, an analyst at FBR Capital Markets told Bloomberg. “It would obviously be a big change and a historic change but it’s obvious Microsoft needs change in terms of strategy in terms of the next leg of growth.”

Since vacating the CEO spot in 2000, Gates has spent an increasing amount of time working on the Bill and Melinda Gates Foundation, his philanthropic venture. While Gates will still hold a spot on the Microsoft board, most of his energies will now turn to the foundation.

“The board is doing important work right now,” Gates said in a recent interview with Bloomberg television. “The foundation is the biggest part of my time. I put in part-time work to help as a board member. My full-time work will be the foundation for the rest of my life. I will not change that.”

Being freed from his chairman duties could also see Gates doing more on-the-ground work at the company. Indeed, insiders say he’s been doing precisely that over the past few months.

Microsoft’s CEO search has been going on since Steve Ballmer announced his retirement in October 2013 and whoever the board decides on, you can’t help but feel that the company will breathe a collective sigh of relief, if only because the situation will have actually been resolved.