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Microsoft announced this morning that Satya Nadella will serve as its third chief executive.

Various reports over the past week pegged Nadella, Microsoft’s former cloud and enterprise head, as the leading candidate to replace Steve Ballmer when he retires later this year. Nadella’s appointment makes it clear that cloud services will play a big role in Microsoft’s future.

Microsoft also announced that founder Bill Gates will step down as chairman of the board and take on a new technology adviser role to “devote more time to the company.” John Thompson, who led the new CEO search, will take up the mantle as chairman of the board.

“Microsoft is one of those rare companies to have truly revolutionized the world through technology, and I couldn’t be more honored to have been chosen to lead the company,” Nadella said in a statement this morning. “The opportunity ahead for Microsoft is vast, but to seize it, we must focus clearly, move faster and continue to transform. A big part of my job is to accelerate our ability to bring innovative products to our customers more quickly.”


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In a memo to employees this morning, Nadella laid out his vision for the company and said that “this is a software-powered world.”

An Indian immigrant and 22-year Microsoft veteran, Nadella led the development of the company’s cloud services, which serves as the backbone for things like Office 365, Xbox Live, and Bing. One of Nadella’s big challenges going forward will be to help Microsoft regain some relevance in the mobile world. Windows Phone has inched its way toward being the third-place smartphone platform, but that’s mainly due to BlackBerry’s implosion and success in European markets.

“Microsoft is a really complex business. … You’re never going to find a CEO who is going to do it all,” said Kevin Spain, a former Microsoft executive who previously worked with Nadella and now serves as a general partner at venture capital firm Emergence Capital Partners. “Instead, you need someone who is a great leader and a great team builder, and I think Satya is both of those things.”

Steven Sinofsky, the former Microsoft Windows head who was once considered a leading CEO candidate before he abruptly left the company last year, congratulated Nadella on Twitter this morning:

To learn more about the new Microsoft, check out our feature on Nadella and the company’s future.

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