Microsoft appoints Satya Nadella to head up cloud division

Microsoft has appointed Satya Nadella as the replacement for Bob Muglia for the company’s server and tools business, which is focusing on cloud computing.

Nadella is an engineer from Microsoft’s Online Services business and has been with the company for 19 years, only a few years less than the 23 that Muglia laid claim to. At the time of removing Muglia as head of the department, CEO Steve Ballmer said that new leadership was needed to help the company dominate the cloud market.

The division is worth $15 billion and is a major bet for Microsoft, but with studies indicating that the cloud market, both public and private, will boom over the next few years, it’s a much safer bet than some recent decisions. Not mentioning the Kin.

The cloud is such a big deal to Microsoft that it has already switched much of its internal services to run on the cloud. It also forecasts that within three to five years at least 80 percent of the company’s applications will run on the cloud, according to Total Telecom.

Muglia will aid Nadella in his position while the transition takes place. Nadella already has some cloud experience from his previous position, where he helped oversee the technical strategy of the company’s cloud network, which covers search, portal and advertising.

Despite talk of a management shake-up which is expected this month, the fact that Ballmer appointed a veteran to the cloud position arguably means he is unwilling to bring in flesh blood for the top positions. He did promise to use engineers to replace key positions.

Investors want to see Microsoft pay more attention to its cloud, smartphone and tablet markets. Ballmer has received a lot of criticism from all flanks, but if this latest appointment pans out, some more cloud success could bring Microsoft back on track and dampen the waves of criticism.