Microsoft named company veteran Satya Nadella as its next CEO, ending a longer-than-expected search for a new leader after Steve Ballmer announced his intention to retire in August.
Microsoft also said John Thompson, lead independent director, would succeed Gates as chairman. Gates will assume a new role as technology adviser and retain a seat on the board, the company said in a statement.
Shares of the world's largest software maker were up 1.1 percent in premarket trading following the news.
The choice of Nadella was widely expected, and investors and analysts are already weighing how effective the 22-year veteran will be in re-igniting the company's mobile ambitions and satisfying Wall Street's hunger for cash.
Microsoft faces a slow erosion of its PC-centric Windows and Office franchises and needs to somehow challenge Apple Inc and Google Inc in the new realm of mobile computing. At the same time, some investors are campaigning for retrenchment and a bigger cut of the company's massive cash pile.
Most agree that Nadella's background in creating Microsoft's Internet-based, or "cloud," computing services makes him a safe pair of hands to take the company forward, but there remains a question over his ability to make Microsoft a hit with consumers or with impatient shareholders.