After a highly-anticipated executive search, Microsoft Relevant Products/Services has picked insider Satya Nadella as CEO. He becomes the software giant’s third-ever CEO.

Microsoft also announced that company co-founder Bill Gates, previously Chairman of the Board of Directors, will assume a new role on the board as "Founder and Technology Advisor," and will devote more time to the company, supporting Nadella in shaping technology and product direction. John Thompson will assume the role of chairman as well as continue in his current role as lead independent director for the board.

Nadella, who previously served as the senior vice president of Research and Development for Microsoft’s Online Services Division, said he is both honored and humbled to succeed Bill Gates and Steve Ballmer as the third CEO of Microsoft. The India native joined Microsoft 22 year ago, the company said, because he saw how clearly it empowers people to do magical things and ultimately make the world a better place.

“Our industry does not respect tradition -- it only respects innovation,” Nadella said. “The opportunity ahead for Microsoft is vast, but to seize it, we must move faster, focus and continue to transform. I see a big part of my job as accelerating our ability to bring innovative products to our customers more quickly.”

Changing the World

Nadella started his career as a member of the technology staff at Sun Microsystems. In 1992, he joined Microsoft. He was on his way to getting a master’s degree in business Relevant Products/Services when the Microsoft job offer came. The company was building an operating system Relevant Products/Services that ultimately would be known as Windows NT, and needed team members who understood UNIX and 32-bit operating systems, he said. Nadella wanted to complete his master’s degree and take the Microsoft job. He did both.

Nadella came to Microsoft, he told employees in an e-mail, “for the same reason I think most people join Microsoft -- to change the world through technology that empowers people to do amazing things. Many companies aspire to change the world. But very few have all the elements required: talent, resources and perseverance. Microsoft has proven that it has all three in abundance.”

We caught up with Rob Enderle, principal analyst at The Enderle Group, to get his take on the Nadella pick. Nadella was one of two people he was predicting would be the next to sit in Microsoft’s CEO seat. The other was Qui Lu, executive vice president of Microsoft’s Applications and Services Group.

No Triage Needed

“Given how well the server division has done and his cloud Relevant Products/Services responsibilities, clearly the board feels Nadella is the best choice. So that rewards good work,” Enderle said. “It picks and tries to expand on success and will better assure that success than any other path.”

Enderle noted that Microsoft is doing well financially -- on paper the company is a money machine. For that reason, he said, bringing in someone from the outside risks blowing up the machine because the outsider would have to learn everything -- the culture, the various businesses -- in a mammoth company.

“Starting somebody from scratch like you would if Microsoft was a catastrophe company would lead to a triage situation -- and if you triage a healthy patient, you may kill them. A company that needs a turnaround is dying anyway so you will take that risk,” Enderle said.

“But Microsoft is not in that position, so why take the risk that the new person would kill it when you don’t have to? Instead you look internally and find a known quantity that understands the company and then you bet that they can expand their breadth to do the parts that aren’t within their area of competence,” he added.