That Microsoft chose an insider shows that the pool of external qualified candidates with the necessary business and technology experience, knowledge and skills was small, according to IDC analyst Al Gillen.
"If Microsoft was going to pick an insider, Nadella is the best choice. He understands how to deliver cloud services and how the industry is changing" Gillen said. "I'm glad they chose him. I think he'll make a very good CEO."
Of course, Nadella doesn't have experience as a CEO, let alone running a company as large as Microsoft, so there will be a learning curve for him there, Gillen said.
Microsoft also announced that co-founder Bill Gates will step down as chairman of the board and take on a new role as technology advisor. In this new role, he'll supposedly be more involved with the company than he has been in recent years, when he has been mostly devoted to his philanthropic work.
John Thompson, the board member who led the CEO search committee, will take over as chairman.
During the search process, there were reports that some candidates soured on the prospective job because of concerns that Gates and Ballmer would still have too much influence over the company.
Although it's hard to tell what Gates will end up doing in this new role, he could be a great asset and assist Nadella as he learns the CEO ropes, Gillen said. Nadella is adding new and bigger responsibilities to his plate, including overseeing sales, marketing and internal and external investments. "He's got a much bigger job now," Gillen said.
Nadella has vision and passion, drives his decision-making process with concrete data and knows how to surround himself with strong leaders, Forrester Research analyst James Staten said via e-mail.
"He was brought to [Server and Tools] to teach them the agile online model," Staten said. "This meant getting their software off the linear waterfall development method, to the agile, continuous delivery method used by the online group and to transition their apps over to [cloud computing]."
Nadella met with some serious resistance at first from division managers, but he prevailed, according to Staten. "Satya refused to back down or compromise on the shift to the cloud and a lot of those managers who refused to get on board aren't there anymore," he said.
"He can be stubborn, very strong willed," Staten said.
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