Microsoft: John Thompson to succeed Bill Gates as chairman; goal is to transform PC pioneer

After a five-month search, Microsoft Corp has appointed Hyderabad, India-born (but US citizen) Satya Nadella as its new CEO effective immediately. He succeeds Steve Ballmer.

Microsoft also said John Thompson (pictured), lead independent director, would succeed Gates as chairman. Gates will assume a new role as technology adviser and retain a seat on the board. Gates will devote more time to product development, while running his philanthropic foundation, the company said in a statement.

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

Nadella, 46, is seen as an insider steeped in business technology and is expected to speed a turnaround at a software maker that helped usher in the personal-computing age, only to be left behind as the world shifted toward the Web and mobile devices.

The new CEO, who joined Microsoft in 1992, takes over at a critical juncture. Consumers and businesses are shunning PCs in favour of hand-held 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. That includes integrating the $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.

He sold business-software developer Great Plains to Microsoft and oversaw Nadella while at the Redmond, Washington-based company. It is a sentiment that found echo among most Indian IT industry stalwarts on Tuesday.

While Nadella brings experience running cloud and enterprise businesses, he’ll need to boost Microsoft’s presence in consumer markets, where rivals have seized the lead. The first question on the minds of critics is 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.”

Much will depend on the role of Microsoft’s board, where former CEOs Gates and Ballmer will remain directors. Thompson, the former Symantec Corp CEO and IBM executive, will also bring a new perspective as chairman.

The transition at Microsoft follows the worst decline on record for PCs in 2013, when shipments dropped 10% and are projected to languish through 2017. Microsoft’s revenue growth has averaged 9.4% in the last ten years, compared with 24% during the prior period. In the past decade, Microsoft’s stock has gained 88% including dividends, compared with a 91% rise in the Standard & Poor’s 500 Index. Microsoft shares on Nasdaq were flat around $36.50 at 9:15 pm India time.

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

Nadella won’t be doing any interviews today, Mark Murray, a spokesman for Microsoft, said.

“His focus today is on partners, customers and employees.” Nadella will hold a webcast for partners and customers, as well as an employee town hall, early today (India time).