Satya Nadella has been named as the next chief executive at Microsoft Corp., the Wall Street Journal reported.
As the software giant faces competition across all fronts of its business, founder Bill Gates, who previously was chairman, has been moved to a new role on the board as technology adviser. He will devote more time to the company, supporting Nadella in shaping technology and product direction.
According to the WSJ, John Thompson, who was formerly the lead director, will become chairman.
Since the Redmond, Wash., company was founded in 1975, Nadella's naming to the post, effective immediately, makes him the third CEO in the software company's 38-year history.
"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."
Steve Ballmer, former Microsoft CEO, had announced his plans to retire in August. He was originally handed the reins in 2000 when founder and college friend Bill Gates stepped aside after 25 years, the WSJ reported.
"The appointment of Nadella, who is 46 years old and leads the Microsoft division that makes technology to run corporate computer servers and other back-end technology, will be considered a safe choice," the WSJ reported. "He has signaled a desire for continuity, telling directors that, as CEO, he hopes to lean on Gates, according to several people familiar with the matter. Little in Nadella's public history at Microsoft suggests he will break from the company's pattern as a fast follower, rather than a trend setter."
While Ballmer will remain a director, Nadella will also join the company's board.
Nadella is a "safe pick" in comparison to hiring an outsider, analysts at FBR Capital Markets said.
"As Microsoft continues down the right lane of the highway at 55 mph with its new CEO in hand, the fear among many investors is that other tech vendors from social, enterprise, mobile, and the tablet segments continue to easily speed by the company in the left lane of innovation and growth," the analysts said in a note.
As people and businesses shift more computing chores to the Web, tablets and smartphones, the company has missed potential growth areas while continuing to churn out big profits, the WSJ reported.
"Microsoft is heavily dependent on a trio of products-Windows, Microsoft Office and related software to run companies' back-end computing gear-that are deeply tied to the sales of Windows-powered PCs. Other well-known products, like the Bing search engine and the Xbox videogame system, don't contribute as much to results," the WSJ reported.
Known for repairing technical glitches at Microsoft's Web-search service, disarming Silicon Valley technologists suspicious of the company and fostering collaboration in a turf-conscious workplace, Nadella's experience is in serving corporate customers-the source of two-thirds of Microsoft profits.
According to the WSJ, "He has been an internal champion of Microsoft's efforts to rent computing power to other companies, even though that business competes with some of Microsoft's most-profitable products."
To work on the pressures Microsoft faces in the tech space, Nadella will have to work alongside Ballmer and Gates for a better future for the company, the WSJ reported.
"We do not want to see a continuation of the existing direction for the business, so it will be important that Mr. Nadella be free to make changes," Nomura analyst Rick Sherlund wrote in a note Friday.
