Reports: Microsoft Will Pick Satya Nadella and Bill Gates Will Step Down

Multiple sources told several news outlets that Microsoft MSFT enterprise and cloud boss, Satya Nadella, would be the company’s next CEO, replacing Steve Ballmer, who plans to retire.

In addition, people with knowledge of the process told Bloomberg the Microsoft board was discussing bringing in John Thompson to replace co-founder Bill Gates as board chairman. At least two sources said that even if Gates did step down, he might continue to be involved in areas such as product development.

In addition to Bloomberg, Recode spoke with a number of Microsoft employees who said they believed Nadella would be tapped for the CEO position. Reuters also reported speaking to a source who said Microsoft would likely appoint Nadella as it next chief executive.

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While the sheer weight of multiple sources all telling the same story was compelling, there were still some inside the company who thought the company might pick an outsider, according to Recode.

Even sources who told Bloomberg that Nadella emerged as a strong candidate weeks ago admitted plans were not final.

Meanwhile, with Microsoft competitors, such as Apple AAPL and Google GOOG exerting influence on technology and shifting the focus away from personal computers to mobile devices and the cloud, Nadella, with his enterprise-technology experience, seemed uniquely positioned to lead the company in that battle.

MIT’s Sloan School of Management professor, Michael Cusumano told Bloomberg that Nadella’s reputation and close ties with Microsoft’s engineering corps also made him a good choice for the top job at the company.

Cusumano said, “Microsoft is a contentious enough place that you wouldn’t want to bring in someone who lacked credibility with the engineers.”

Quartz, which interviewed Nadella in December about his vision for the future, quoted him as saying, “There’s 2 trillion dollars of IT spend. This is inclusive of everything that’s happening in hardware, networking, software platforms, applications. That is all going to get disrupted by the move to the cloud.”

Nadella added that Microsoft, as a company, was betting people would consume technology in two forms, “devices and services” or “cloud and devices.”

As for talk of Gates vacating his position as chairman of the board, Daniel Ives, analyst at FBR Capital Markets said replacing Gates with an outsider such as Thompson is almost necessitated by the fact that an insider would be taking over as CEO.

Said Ives, “If they are going for the CEO who is right down the hall from Steve Ballmer, you’ve got to give investors a bone.” He added, “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.”

At the time of this writing, Jim Probasco had no position in any mentioned securities.