Microsoft Names New Server And Cloud ChiefMicrosoft Names New Server And Cloud Chief

Satya Nadella, Senior Vice President Of Microsoft's Server & Tools Unit

Microsoft has picked an executive with deep engineering and online experience to help build its presence in the nascent cloud computing market.

The company named 19-year veteran Satya Nadella as senior vice president of its $15 billion Server & Tools unit, which houses Microsoft's efforts in data center hardware and services. Microsoft sells those offerings directly to businesses, but is also pitching them as hosted, or cloud, offerings to enterprises that are looking to simplify their IT architectures.

"Satya has deep experience in both our server business and online services, which will help accelerate our momentum while setting the course to deliver the cloud computing scenarios of the future," said Microsoft CEO Steve Ballmer, in a statement.

Nadella replaces Microsoft veteran Bob Muglia as head of the highly profitable server business. Ballmer took the unusual step in January of publicly announcing that he thought Muglia was no longer fit for the job. "This is simply a recognition that all businesses go through cycles and need new and different talent to manage through those cycles," Ballmer wrote at the time.

While Ballmer was vague about the reasons, analysts believed that the CEO had lost faith in Muglia's ability to lead the company into the next generation of enterprise computing. "Our key conclusion from the management change is that Ballmer feels that new leadership is needed to navigate Microsoft's evolution to the cloud," said Wells Fargo Securities analyst Jason Maynard.

As the former head of engineering in Microsoft's online unit, Nadella should be well prepared to lead Microsoft's ventures into the cloud. He said he's up to the task.

"Our Server and Tools business is one of the fastest growing and most profitable businesses at Microsoft," Nadella said, in a statement. "I see great opportunity for Microsoft to grow the business and also lead the way in the transformation of enterprise IT. I'm excited to work with such a high-caliber team to chart the path for our continued success today and growth in the future," Nadella said.

Ballmer may not be done with the shakeup. Bloomberg reported Tuesday that he's contemplating broader changes that would elevate other employees with programming and engineering backgrounds to senior positions. Such moves could help Microsoft restore a culture of innovation at a time when it needs more breakthroughs in growth markets like smartphones and tablets, in addition to the cloud.

Microsoft has not commented on the speculation. The company's shares were flat at $28.11 in midday trading Wednesday.