Microsoft Shortens List of Potential CEOs

Ford leader may be lone outsider candidate on list with Microsoft executives.

Microsoft CEO Steve Ballmer speaks during a press conference Sept. 3, 2013, on the company's deal with Finnish mobile phone manufacturer Nokia in Espoo, Finland.
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Microsoft is reportedly making progress hunting for a CEO, but a list of at least five candidates is mainly current or former employees, and an insider could have a difficult time reinventing the company to compete with other tech industry giants.

A list of candidates to replace outgoing Microsoft CEO Steve Ballmer includes Alan Mulally, the CEO of the Ford Motor Company, but he is the only person on that list who is not a current or former employee of the Seattle-based tech company, Reuters reports.

Possible candidates on that list also include former Nokia CEO Stephen Elop, who headed Microsoft's business division from January 2008 to September 2010, Microsoft Executive Vice President Tony Bates and Satya Nadella, who is Microsoft's cloud and enterprise chief, according to Reuters.

[READ: Bill Gates Pressured to Quit Microsoft]

Names of other candidates were not learned by Reuters, but the news agency reported that Microsoft had narrowed its list significantly after starting with about 40 names.

Ballmer plans to step down as CEO before August 2014, after the company is slated to complete a purchase of Nokia as part of a shift to embrace mobile device technology.

"My original thoughts on timing would have had my retirement happen in the middle of our company's transformation to a devices and services company," Ballmer said in August. "We need a CEO who will be here longer term for this new direction."

Microsoft remains profitable despite the decline of the PC market that was once its foundation, but Ballmer has been criticized for failing to take advantage of the rise of mobile and cloud technologies since 2000.

[READ: Microsoft CEO Steve Ballmer to Retire Within 12 Months]

The appetite to revamp Microsoft after Ballmer's departure is reportedly so high that three investors who collectively hold 5 percent of the company's stock called for the company's founder Bill Gates to resign as chairman of the tech giant's board, Reuters reported in October.

Outside perspective on the company could be the best addition to help Microsoft find new ways to compete in the shifting tech business, making Mullaly the most appealing name on the candidate list, says David Cearley, the lead Microsoft analyst at technology research firm Gartner.

"If they get somebody from within the company, then the devices and services strategy that is in place is unlikely to change dramatically," Cearley says.

The company has a very strong internal culture, so internal candidates will be "preconditioned with the politics of Microsoft and its product strategy," says Al Gillen, system software analyst with International Data Corporation, a market research firm.

"There may be value in Elop coming back to Microsoft after some time away from it at Nokia," Gillen says.

[READ: Microsoft Purchases Nokia for $7.2 Billion]

The challenge for a new Microsoft CEO who has not previously worked at the company would be the gap of in depth technology skill that is common even with management at the company, Gillen says.

"It is very common for people at the vice president and president levels will be involved in making very technical decisions," he explains.

That tech savvy common among Microsoft employees is a double-edged sword because it can make executives at the company overconfident in the technical skill, Gillen says.

"In some cases they believe they alone know how to compete in the industry," he opines.

Outsider perspective on Microsoft would be more important for a new CEO than a technology background because the tech industry is shifting to reward better product strategy, Gillen says.

"In the years ahead, the business is not going to be as much about technology decisions as it is going to be about product decisions," Gillen predicts. "It is going to be more about the functionality of an application and how it meets your needs."


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