Satya Nadella, executive vice president, Cloud and Enterprise, addresses employees during the One Microsoft Town Hall event in Seattle, Washington in this July 11, 2013 photo made available to Reuters on January 30, 2014. [Photo/Agencies]

Microsoft Corp named Satya Nadella as its next chief executive officer on Tuesday, ending a longer-than-expected search for a new leader after Steve Ballmer announced his intention to retire in August.

Nadella is only the third CEO in Microsoft's 39-year history, following co-founder Bill Gates and Ballmer.

Microsoft also announced that John Thompson, lead independent director, will succeed Gates as chairman. Gates will assume a new role as "technology advisor," the company said in a statement.

Shares of the world's largest software maker edged higher in premarket trading.

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.