Satya Nadella named new Microsoft CEO as Bill Gates steps down

US computer giant taps insider for the top job amid weak demand for its flagship products

PUBLISHED : Tuesday, 04 February, 2014, 10:49pm
UPDATED : Wednesday, 05 February, 2014, 6:08am

US computer giant Microsoft named Satya Nadella as its next chief executive, tapping an insider steeped in business technology to speed turnaround at a software maker that helped usher in the personal-computing age only to be left behind as the world shifted towards the web and mobile devices.

Nadella would replace Steve Ballmer, effective immediately after a five-month search, Microsoft said in a statement yesterday. Bill Gates, the company's first chief executive, will step aside as chairman and devote more time to product development, while remaining on the board and running his philanthropic foundation. John Thompson, the board member who led the search for chief executive, becomes chairman.

The new chief executive, who was born in India and joined Microsoft in 1992, takes over at a critical juncture.

Consumers and businesses are shunning personal computers in favour of handheld devices made by rivals, sapping demand for Microsoft's flagship products.

Besides playing catch-up to the likes of Apple and Google, Nadella will be tasked with completing strategy changes begun by Ballmer last year. These include the US$7.2 billion integration of Nokia's handset unit and turning Microsoft into a provider of services and hardware.

"He's really the complete package - he has incredible intellect but he also combines that with a deep curiosity and willingness to learn," said Doug Burgum, who sold business software developer Great Plains to Microsoft and oversaw Nadella while at the Washington-based company.

While Nadella brings experience running cloud and enterprise businesses, he will need to boost Microsoft's presence in consumer markets, where rivals have seized the lead.

The first question on the minds of critics was whether the Microsoft veteran of 22 years can deliver the same fresh thinking as an outsider, said Daniel Ives, an analyst at FBR Capital Markets.

"He has all the qualifications to take over, but the question for investors is will he be able to change things up," said Ives, who rates Microsoft the equivalent of a hold.

Much will depend on the role of Microsoft's board, where former chief executives Gates and Ballmer will remain directors. Thompson, the former Symantec chief executive and International Business Machines executive, will also bring a new perspective as chairman.

"During this time of transformation, there is no better person to lead Microsoft than Satya Nadella," Gates said in the statement.

The transition at Microsoft follows the worst decline on record for personal computers in 2013, when shipments dropped 10 per cent and are projected to languish through 2017. Microsoft's revenue growth has averaged 9.4 per cent in the past 10 years, compared with 24 per cent during the prior period. In the past decade, the stock has gained 88 per cent including dividends, compared with a 91 per cent rise in the S&P 500 Index.

The new chief executive will oversee a sprawling empire of 130,000 employees once the Nokia acquisition closes in the next few months.