Expected Microsoft CEO Satya Nadella
Expected Microsoft CEO Satya Nadella

Get ready for some major shakeups at Microsoft: Reports say CEO Steve Ballmer is set to be replaced by Satya Nadella, while Bill Gates could be out as company chairman.

Nadella currently serves as Microsoft’s executive vice president of Microsoft’s Cloud and Enterprise group, where he leads many of the online initiatives for the company. In the past, Nadella has been behind the transformation of Windows Live Search into Bing and the introduction of Microsoft’s Office Small Business products.

Nadella, who has worked with Microsoft since 1992, was considered by experts to be one of the front-runners to replace Ballmer after the CEO announced his planned departure in August 2013. Some other noted front-runners were current Microsoft EVP and former Skype head Tony Bates, and current Ford CEO Alan Mullaly.

However, some believe that Nadella may not hold the strongest resume for the position. Some detractors point to Nadella’s lack of experience as a chief executive, unlike Bates and Mullaly, as a potential downfall. Others believe that Nadella’s lack of familiarity with the all of Microsoft’s product line could cause some businesses to suffer, but then again, very few executives hold Ballmer’s familiarity.

In speaking with Bloomberg, Michael Cusumano, a professor at MIT’s Sloan School of Management, said Nadella should be able to rally employees instantly thanks to his electronics and computer science background. “Microsoft is a contentious enough place that you wouldn’t want to bring in someone who lacked credibility with the engineers,” Cusumano said.

Meanwhile, Bloomberg reports that Gates may step down as company chairman, possibly to be replaced by Microsoft lead independent director John Thompson. Sources close to the matter say that Gates would still be involved with the company, but he would only do so in an undetermined role while dedicating more of his time to philanthropic efforts.

According to Daniel Ives, an analyst at FBR Capital Markets, Gates’ departure as chairman could be an even bigger shift in the company than Ballmer’s leaving. Ives told Bloomberg that with Nadella’s expected appointment to CEO, he wouldn’t be surprised if the company hired from outside the company to replace Gates.

“If they are going for the CEO who is right down the hall from Steve Ballmer, you’ve got to give investors a bone,” said Ives, who has the equivalent of a hold rating on the stock. “It would obviously be a big change and a historic change but it’s obvious Microsoft needs change in terms of strategy in terms of the next leg of growth.”


For more legal news on the tech giant Microsoft, check out these InsideCounsel stories:

Tech giants fight patent reform

Motorola patent suit brings light to corruption in patent system

5 notable GCs in the news

IBM takes the lead in patents once again