Report: Microsoft Picks Nadella As CEO, May Replace Gates As Chairman

Microsoft is getting ready to name Satya Nadella, executive vice president of its Cloud and Enterprise Engineering Group, to replace Steve Ballmer as CEO, Bloomberg reported Thursday, quoting sources "briefed on the process."

Microsoft's board is also considering replacing Chairman Bill Gates, with John Thompson, lead independent director, emerging as a candidate, according to the Bloomberg report.

Some candidates Microsoft has talked with about the CEO job have concerns over the influence Gates and Ballmer could exert if they keep their seats on the company's board, the Wall Street Journal reported earlier this month.

[Related: Report: Ericsson CEO Pulls Out Of Microsoft CEO Hunt, Says He's Staying Put ]

A Microsoft spokesperson declined to comment on the Bloomberg report.

Nadella joined Microsoft in 1992 and was named head of the Server and Tools division in 2011. His LinkedIn profile still lists him in that role, but his title changed in Microsoft's corporate re-organization in July.

Nadella has been one of the leading internal candidates during Microsoft's CEO search. He's the main architect of Microsoft's cloud computing strategy, often explaining in public appearances how Microsoft has learned much from running mega-scale Internet services like Office 365, Bing and Outlook.com.

One of Nadella's biggest achievements was leading Microsoft's Server and Tools business to $19 billion in revenue in fiscal 2012. His impressive track record suggests he'd be an excellent CEO, several partners told CRN.

Rand Morimoto, president of Convergent Computing, an Oakland, Calif.-based Microsoft partner who has worked directly with Nadella previously, described him as "very smart and very likeable," as well as savvy about the cloud and data center issues that partners are facing in this segment.

Ric Opal, vice president at Peters & Associates, a Microsoft partner in Oakbrook Terrace, Ill., said choosing Nadella would help Microsoft avoid the learning curve that would come with the hiring of a CEO from outside the company. "Given that Satya was part of the restructuring [in July], now the restructuring can accelerate," he told CRN.

Chris Hertz, CEO of New Signature, a Washington, D.C.-based Microsoft partner with a substantial cloud business, told CRN he'd be thrilled if Nadella ends up being the pick.

"Elevating an in-house candidate provides continuity and stability, which as a partner, I greatly appreciate," Hertz said in an email. "If Satya becomes CEO, I think our prosperity would not only continue, but would likely be accelerated. "

NEXT: Nadella's Background Bodes Well For Future, Say Partners

Given Microsoft's current course of building its cloud business, it would be hard to find a more suitable CEO candidate, Alan "Skip" Gould, president and CEO of BrightPlanIT, a Buffalo, N.Y.-based Microsoft partner, told CRN.

"Microsoft has said they're all in with cloud, and [hiring Nadella] would be unwavering proof that they are," Gould said.

Not all partners are bullish on Nadella as CEO, however. Jeff Middleton, President of IT Pro Experts, a Microsoft partner in Metairie, La., thinks Microsoft would be taking "a huge risk" in taking Nadella out of his cloud leadership role to run the entire company.

"It seems inevitable that cloud would be a distracting business segment for Nadella to favor while trying to handle the diversified interests of everything in Microsoft," Middleton said in an email. "Cloud is about Microsoft owning everything independently and not sharing with others, so how does that work, for instance, in the divisions with OEM or partner concerns."

While it's true that Nadella hasn't held the sort of role at Microsoft that involves building consensus between different groups -- which is the direction laid out in Ballmer's "One Microsoft" email to employees in July -- the fact that most partners seem to like him suggests this isn't an insurmountable challenge.

In October, at a Microsoft press conference in San Francisco, Nadella was asked if he'd be interested in the Microsoft CEO job. He dodged the question, saying only that "Steve is the CEO, and I'm excited about my job."

If the Bloomberg report is accurate, Nadella's job just got a lot bigger.

PUBLISHED JAN. 30, 2014