Gates returns to MS frontlines as Satya Nadella named next CEO

Bill Gates, left, and Satya Nadella

There is a whirlwind blowing at Microsoft and it is not Satya Nadella, an executive in charge of the company's small but growing business of delivering software and services over the Internet, as its new CEO.

It is the return of company founder Bill Gates leaving the chairman role for a new role as technology adviser which means back to the management frontlines.

The software company announced Tuesday that Nadella will replace Steve Ballmer, who said in August that he would leave the company within 12 months, The New York Daily reported.

Nadella will become only the third leader in the software giant's 38-year history, after Gates and Ballmer. Board member John Thompson will serve as Microsoft's new chairman.

Nadella, who is 46 and has worked at Microsoft for 22 years, has been an executive in some of the company's fastest-growing and most-profitable businesses, including its Office and server and tools business.

For the past seven months, he was the executive vice president who led Microsoft's cloud computing offerings. That's a new area for Microsoft, which has traditionally focused on software installed on personal computers rather than on remote servers connected to the Internet. Nadella's group has been growing strongly, although it remains a small part of Microsoft's current business.

"Satya is a proven leader with hard-core engineering skills, business vision and the ability to bring people together," Gates said in a statement. "His vision for how technology will be used and experienced around the world is exactly what Microsoft needs as the company enters its next chapter of expanded product innovation and growth."

The company said that Gates, in his new role as founder and technology adviser, "will devote more time to the company, supporting Nadella in shaping technology and product direction."

A man is silhouetted against a video screen while holding a Nokia Lumia 820 smartphone. Upon Microsoft's announcement, investors and analysts are weighing how effective Nadella, 46, will be in re-igniting the company's mobile ambitions and satisfying Wall Street's hunger for cash.

Gates will also remain a member of Microsoft's board.

Analysts hope that Nadella can maintain the company's momentum in the rapidly expanding field of cloud computing while minimizing the negative impact from Microsoft's unprofitable forays into consumer hardware. Major rivals in cloud computing include Google Inc., Amazon.com Inc., Salesforce.com Inc. and IBM Corp.

FBR Capital Markets analyst Daniel Ives said he views Nadella as a "safe pick."

Ives said investors are worried that rivals "from social, enterprise, mobile, and the tablet segments continue to easily speed by the company." In a note to investors, he said the company's main need now is "innovation and a set of fresh new strategies to drive the next leg of growth."

Microsoft shares rose 8 cents to $36.56 in morning trading Tuesday.