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Microsoft exec open to new ideas

Cloud leader seen as possible company CEO

– Microsoft’s cloud-computing chief Satya Nadella, who has worked 21 years at the world’s largest software maker, took time in Paris this month to huddle with local startups.

It’s important to speak with startups because “the tech cycle is such that the small guys make it big and the big guys die,” Nadella said in an interview in Paris, where he was attending a technology conference.

As a senior manager at Microsoft – and a candidate to be its next CEO – Nadella needs to bone up all he can on how to keep a decades-old technology behemoth from getting lapped by upstarts. Since CEO Steve Ballmer’s August announcement that he plans to retire within a year, Nadella has emerged as one of the leading contenders, people familiar with the matter have said.

The board will complete the search in early 2014, lead independent director John Thompson wrote in a recent blog post.

Even if Nadella isn’t appointed CEO, he has said publicly that he absolutely intends to stay at Microsoft. That would set up the 46-year-old as a key lieutenant to whoever becomes the new chief, given Nadella’s long history at the company, where he has worked in everything from small business software to the Bing search engine to cloud services.

The task ahead for whoever gets the job is enormous. Microsoft is trying to weather a contraction in the personal computer market, which forms its core business. Ballmer has overhauled the company to focus on hardware and Internet-based services, as a way to reduce dependence on traditional PC software.

To survive, Microsoft must hunt for and embrace new concepts, Nadella said in a speech in Paris.

“It’s not as if there haven’t been at least four or five big changes that we’ve had to navigate over the last 30 years,” he said. “It will come down to whether we can do that.”

Finding a new CEO is proving daunting. Microsoft identified more than 100 candidates, spoke with dozens and has since focused on about 20 individuals. Several candidates have declined overtures or stepped out of the running, including Qualcomm executive Steve Mollenkopf, eBay CEO John Donahoe and former VMWare CEO Paul Maritz, people familiar with the matter have said.

Should he make the final cut, Nadella has the chops to handle the turbulence facing Microsoft, executives who have worked with him said. Since taking over Microsoft’s server and tools unit in 2011 – now renamed cloud and enterprise – he has built the Azure cloud service into a credible rival to Amazon Web Services, they said.

Nadella boosted the unit’s revenue to $20.3 billion in the fiscal year that ended in June, up from $16.6 billion when he took over in 2011. He has revved up sales by leading Azure into the faster-growing portion of the market and collaborating with Microsoft competitors Oracle and Box.

The business remains small compared with Amazon. About 39 percent of companies tapping the cloud to run applications use Azure, compared with 62 percent for Amazon, according to Forrester Research. Even so, the market share has improved.

“Three years ago, you would have written off any Microsoft cloud push as ill-fated, but Azure is now a real contender,” said Aaron Levie, CEO of online storage startup Box. “That’s through aggressive pushing, working with and reaching out to competitors and constant innovation.”