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Microsoft on Tuesday announced that Satya Nadella was its next leader, betting on a longtime engineering executive to help the company keep better pace with changes in technology.

The selection of Nadella to replace Steven A Ballmer, which was widely expected, was accompanied by news that Bill Gates, a company founder, had stepped down from his role as chairman and become a technology adviser to Nadella.

John W Thompson, 64, a member of the Microsoft board who oversaw its search for a new chief executive, became the company's chairman, replacing Gates.

"During this time of transformation, there is no better person to lead Microsoft than Satya Nadella," said Gates, who remains a member of Microsoft's board. "Satya is a proven leader with hard-core engineering skills, business vision and the ability to bring people together."

In a statement, Nadella said, "Microsoft is one of those rare companies to have truly revolutionized the world through technology, and I couldn't be more honored to have been chosen to lead the company."

In Nadella, Microsoft's directors selected both a company insider and an engineer, suggesting that they viewed technical skill and intimacy with Microsoft's sprawling businesses as critical for its next leader. It has often been noted that Microsoft was more successful under the leadership of Gates, a programmer and its first chief executive, than it was under Ballmer, who had a background in sales. Ballmer, 57, said in August that he was stepping down.

Nadella, 46, from Hyderabad, India, is only the third chief executive of Microsoft, an icon of American business that has struggled for position in big growth markets like mobile and internet search. The company has correctly anticipated many of the biggest changes in technology —- the rise of smartphones and tablet computers, to use two examples —- but it has often fumbled the execution of products developed to capitalize on those changes.

It remains to be seen whether Nadella's technical background, along with the closer involvement of Gates in product decisions, will give the company an edge it lacked during the Ballmer years. Microsoft said in a statement that Gates will "devote more time to the company, supporting Nadella in shaping technology and product direction."

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