Microsoft stays in-house, taps Nadella as new CEO

Bill Gates steps down from board chairman, will advise new chief exec on 'shaping technology and product direction'

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In 2013, Ballmer reorganized the company and kicked off the $7.4 billion purchase of Nokia, moves that Nadella will back.

"Today we're focused on a broader range of devices," Nadella said in an email to Microsoft's employees. "While the deal is not yet complete, we will welcome to our family Nokia devices and services and the new mobile capabilities they bring us."

He will also continue the pivot to devices and services, as well as maintain the company's philosophy that it can serve two masters, consumer and commercial. "We have picked a set of high-value activities as part of our One Microsoft strategy," Nadella told workers. "And with every service and device launch going forward we need to bring more innovation to bear around these scenarios."

Choosing an internal candidate was always the easy, conservative choice, according to experts like Peter LaMotte, an analyst with Levick, a Washington, D.C.-based strategic communications consultancy. "It's important that they find someone who continues the brand perception of the company," LaMotte said in a November interview. "Imagine the problems if they bring in someone totally counter [to the brand]."

Nadella was not only already at Microsoft but is also a technically-savvy executive more in the mold of Gates than Ballmer, who started at Microsoft in sales. According to numerous reports, Gates was closely involved in the winnowing of candidates, and Nadella's choice, along with Gates' commitment to advise Nadella, confirms that.

To some, Gates was too involved, as many sell-side Wall Street analysts had hoped that others on the board would overrule Gates and bring in someone from outside. Those analysts pinned hope on someone with more experience running a major company, even if that meant they were not well-versed in software, someone who would shake up the company, perhaps sell off poor-performing assets, like Xbox, or even split the company into consumer and commercial entities, all to boost the price of the stock, which has been mired for years.

Previously, some suggested that if Microsoft picked an unproven insider -- like Nadella -- they would be tag-teamed with a more experienced executive, perhaps from the board. Gates' renewed focus, even if only part time, proved those rumors right as well.

But Moorhead thought it was still a good idea. "Nadella will need to be augmented by someone with a lot of consumer experience and success," Moorhead said.

Whether Gates is that person is unclear. Gates has been away from Microsoft since 2008 and in his time as CEO showed little finesse for consumer products.

Ballmer, for one, was excited at Nadella's promotion. "I am pumped for the future of Microsoft," he said in a separate statement.

Then Baller urged on the troops he no longer commands. "Stay focused and keep moving forward," said Ballmer. "I am excited about what we will do. Satya's appointment confirms that."

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, or subscribe to Gregg's RSS feed . His email address is

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Copyright © 2014 IDG Communications, Inc.

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