Satya Nadella, senior vice president, research and development, online services division for Microsoft speaks during a Microsoft Search Summit event at the Microsoft San Francisco office in San Francisco, California, U.S., on Wednesday, December 15, 2010. Photographer: David Paul Morris/Bloomberg

Seattle - Microsoft has named Satya Nadella as chief executive, tapping an insider steeped in business technology to speed up a turnaround at the software maker that helped usher in the personal-computing (PC) age only to be left behind as the world shifted towards the web and mobile devices.

Nadella would replace Steve Ballmer effective immediately after a five-month search, Microsoft said yesterday.

Bill Gates, the company’s first chief executive, will step aside as chairman and devote more time to product development, while remaining on the board and running his philanthropic foundation. John Thompson, the board member who led the search for chief executive, becomes chairman.

The new chief executive, who was born in India and joined Microsoft in 1992, takes over at a critical juncture. Consumers and businesses are shunning PCs in favour of hand-held devices made by rivals, sapping demand for Microsoft’s flagship products.

Besides playing catch-up to the likes of Apple and Google, Nadella will be tasked with completing strategy changes begun by Ballmer last year. That includes integrating the $7.2 billion (R80.2bn) acquisition of Nokia’s handset unit and turning Microsoft into a provider of services and hardware.

“He’s really the complete package – he has incredible intellect but he also combines that with a deep curiosity and willingness to learn,” said Doug Burgum, who sold business software developer Great Plains to Microsoft.

While Nadella has experience running cloud and enterprise businesses, he will need to boost Microsoft’s presence in consumer markets, where competitors have seized the lead.

Daniel Ives, an analyst at FBR Capital Markets, said the first question on the minds of critics was whether the Microsoft veteran of 22 years could deliver the same fresh thinking as an outsider.

“He has all the qualifications to take over, but the question for investors is will he be able to change things up,” said Ives, who rates Microsoft the equivalent of a hold.

Much will depend on the role of Microsoft’s board, where Gates and Ballmer will remain directors. Thompson, the former Symantec chief executive and IBM executive, will also bring a new perspective as chairman.

“During this time of transformation, there is no better person to lead Microsoft than Satya Nadella,” Gates said.

The transition at Microsoft follows the worst decline on record for PCs last year, when shipments dropped 10 percent and are projected to languish through 2017.

Microsoft’s revenue growth has averaged 9.4 percent a year in the past 10 years, compared with 24 percent during the prior period. In the past decade, Microsoft’s stock has gained 88 percent including dividends, compared with a 91 percent increase in the Standard & Poor’s 500 index.

The new chief executive will oversee a sprawling empire of 130 000 employees once the Nokia acquisition closes in the next few months.

Nadella was paid $7.67 million for the fiscal year to June last year, according to compensation research firm Equilar. – Bloomberg