Microsoft has named Satya Nadella as its new chief executive, after a five-month search.

Founder Bill Gates will also step aside as chairman and will concentrate on product development. He will retain a seat on the board, with independent director John Thompson becoming chairman.

The appointment of Mr Nadella (46), who created Microsoft’s cloud-based services unit, as the third chief executive in Microsoft’s history is seen as a safe choice for a company struggling to compete in a market that has shifted towards mobile devices and web services.

The appointment will come into effect immediately, Microsoft said.

Industry watchers will be keeping a close eye to see if Mr Nadella has the fresh thinking needed to give Microsoft a boost.

“He has all the qualifications to take over, but the question for investors is will he be able to change things up?” said Daniel Ives, an analyst at FBR Capital Markets.

Indian-born Mr Nadella joined Microsoft in 1992. He accelerated the move to internet-based computing and worked to better connect cloud software with programs for internal corporate networks.

He also promoted interoperability with rival programs, helping to strike a deal to offer Oracle’s database software on Microsoft’s Windows Azure cloud service.

CIARA O’BRIEN