By Bill Rigby
SEATTLE (Reuters) - Microsoft Corp has a stable of senior executives who could be contenders to succeed Chief Executive Steve Ballmer, even though outsiders have sparked the most discussion so far.
After Ballmer's surprise announcement on Friday that he would retire within a year, the board's lead independent director John Thompson, who heads the search for the new CEO, said the planned transformation of the software giant into a fast-moving 'devices and services' company is still on track.
"It does seem like if they are going to continue down the path of this devices and services strategy that they probably get somebody who was part of formulating this strategy or who can stand fully behind it. I don't know if most outside candidates would be willing to do that," said Sid Parakh, an analyst at fund firm McAdams Wright Ragen.
He expects Microsoft to favor an internal candidate.
But insiders would face skepticism from those who want a clean break from Ballmer's personal legacy, as well as other obstacles.
"The issue with internal candidates is that Microsoft has cultivated a holding-company style culture so very few execs are broadly exposed to all areas of the business," said Al Hilwa, an analyst at tech research firm IDC.
The following is a list of potential internal candidates, with pros and cons, based on conversations with analysts and insiders. All except Raikes and Thompson are executive vice presidents.
Satya Nadella, cloud and enterprise
PRO: A 21-year Microsoft veteran, he knows the inner workings of the company, especially the hot areas of servers, data centers and online services. Recently promoted to run the newly created 'cloud and enterprise' unit, he controls the infrastructure behind the 'services' side of Microsoft's new vision.
CON: Although he was once a vice president in the Office unit, he might struggle to impose authority over the all-powerful Windows and Office factions, the wellsprings of the company's profits which are famously antagonistic to one another.
Tony Bates, corporate strategy
PRO: Came to Microsoft two years ago as CEO of the acquired online chat company Skype, which represents the new wave of internet-centric, consumer-focused technology that Microsoft has had difficulty replicating. He so impressed his new boss that Ballmer put him in charge of corporate strategy and relations with developers and PC makers.
CON: May not have been at Microsoft long enough to know how to wrench it into a new shape, and his narrow specialty in the telecommunications and router field may not be broad enough to run such a large software-based company.
Terry Myerson, operating systems
PRO: A young entrepreneur whose web software company was bought by Microsoft in the late 1990s, he might bring a start-up mentality to the top job. Recently selected by Ballmer to run the full range of operating systems - which are still the heart of Microsoft - ranging across Windows PCs, tablets, phones and the Xbox game console.
CON: His last assignment was running the Windows Phone unit, which won praise for its clean, stylish software but has not come close to making Microsoft a big player in the smartphone market.
Qi Lu, search and Internet
PRO: The former Yahoo Inc executive is a heavyweight in the online search and advertising area, with 20 U.S. patents. He now runs the 'applications and services' group, which is in charge of putting Microsoft's established software businesses, like its Office suite, onto the Web. It is a crucial part of Ballmer's reorganization plan.
CON: Under his stewardship, the Bing search engine has cost Microsoft billions of dollars without threatening Google Inc's dominance.
Julie Larson-Green, Xbox gaming console and Surface tablet
PRO: a 20-year veteran of Microsoft and acolyte of recently departed Windows chief Steven Sinofsky, she has intimate knowledge of both the Office and Windows units, having led the redesign of both products.
CON: Is now in charge of the 'devices and studios' unit, leading Microsoft's foray into making its own computers and other hardware. The Surface tablet has had poor sales, despite initial enthusiasm. She may be marked down for her close involvement with the tepidly received Windows 8.
Eric Rudder, research and technology
PRO: A fixture in the background at Microsoft for two decades, this deeply tech-savvy exec now runs Microsoft's long-term research unit and sets overall technical strategy. He is the nearest the company has to a big thinker in the mold of Bill Gates.
CON: Never having been a business unit leader, he may not have the experience to deal with the sharp-elbowed internal politics of Microsoft to survive as CEO.
Kevin Turner, COO
PRO: Microsoft's Chief Operating Officer for the last eight years, the former Wal-Mart Stores Inc exec is the power behind the company's fearsome sales operation.
CON: A professional salesman and motivator, he does not come from an engineering background, which could be a liability.
Jeff Raikes, philanthropy, ex-Office chief
PRO: Bill Gates, who is on the committee to choose the next Microsoft CEO, picked this former leader of the Office unit to be the chief executive of his philanthropic foundation. As Microsoft approaches a critical transition, his long experience, understanding of Gates' thinking and steady hand might be an effective combination.
CON: Immersed in the world of philanthropy for the past five years, he may be out of touch with the latest technology trends. The same generation as Ballmer, his appointment might be seen as a continuation of the old guard.
John Thompson, search committee leader
PRO: It is not beyond the realms of possibility that the man leading the committee to find a new CEO may end up being considered by it. The former IBM executive went on to be CEO of computer security firm Symantec Corp, giving him experience both of a large company reinventing itself and an understanding of the enterprise software market.
CON: He only joined Microsoft's board last year and has no direct experience of managing the company. His current day job is CEO of the little-known, privately held cloud-computing firm Virtual Instruments.
(Reporting by Bill Rigby; Editing by Peter Henderson and Leslie Gevirtz)