He or she must fill the shoes of Ballmer, who has put his own stamp on a company during his 13-year tenure after taking over the top job from co-founder and original CEO Bill Gates. The new boss will come in the midst of a corporate reorganization announced barely a month ago that is among the most-sweeping in Microsoft's 38-year history.
"(He) has to be a software genius as well as a solid manager," said Tim Bajarin, president of tech research firm Creative Strategies.
Bajarin said the next Microsoft CEO will have to "take them back to their roots and manage this dramatic shift to mobile in new ways that puts them on track to grow their role in the only segment of the market that is growing exponentially."
Bajarin said the top of his list would include former Microsoft chief software architect and chief technical officer Ray Ozzie, who left the company in 2010. Last year, Ozzie started a company called Cocomo, which has since changed its name to Talko.
Another top candidate that Bajarin says could get attention is Craig Mundie, who, until Microsoft's July reorganization, had been the company's chief research and strategy officer. At the time the reorganization was announced, Ballmer said Mundie would be devoting "100 percent of his time on a special project" through the end of the year, and then serving as a company consultant until the end of 2014.
Kirk Materne, an analyst who covers Microsoft for Evercore Partners, said the timing of Ballmer's retirement announcement "is a surprise" being that it comes so soon after the CEO unveiled a sweeping plan that included reorganizing the company along business functions such as engineers, marketing and business development.
"I don't think there's an obvious heir apparent," Materne said. "They just did the re-org, and there's a lot of very good executives at Microsoft, but I don't think anyone's been groomed for Ballmer's job."
Among the current Microsoft executives with high-profile positions following the reorganization are Terry Myerson, who runs the operating systems engineering group that's responsible for all of the company's operating system and cloud services development; Julie Larson-Green, who's in charge of Microsoft's devices and studio engineering group; Chief Operating Officer Kevin Turner, who oversees the company's world-wide sale, marketing and Microsoft stores; Satya Nadella, who runs Microsoft's cloud and enterprise engineering group, and applications and services engineering group head Qi Lu.
"They effectively have four people who are being groomed to be CEOs," said Rob Enderle, of the Enderle Group, in reference to Myerson, Larson-Green, Nadella and Lu. "Qi Lu appears to have the inside track. I expect that, depending on the performance of the related groups over the next six months, one will be chosen, but were I to bet right now, it would be Qi Lu.
Mark Moerdler of Bernstein Research said he doesn't believe Ballmer's departure means that the company is going to move away from the strategy announced with its July reorganization.
"The board is supportive of Microsoft's strategy and expressed, we believe, their expectation that the long-term strategy will not change significantly even though obviously a new CEO will have (to) be intimately involved in shaping that strategy and its implementation," Moerdler said in a research note.
Microsoft said its board has appointed a special committee to search for a new CEO. That group includes Microsoft Chairman Bill Gates and Steve Luczo, who runs the board's compensation committee and is the CEO of Seagate Technology.
In a note to clients Friday, Walter Pritchard of Citigroup said he expects the company to look outside for a new candidate "meaning that is it very difficult to predict who could be CEO and what direction they will take the company."
In Enderle's eyes, whoever takes over Ballmer's mantle he will be dealing with three mistakes the CEO made during his tenure.
Ballmer "didn't reorganize the company around his leadership soon enough; he weakened an already weak corporate marketing organization, which would have better highlighted his successes and positioned against Apple (and) Google better; and he didn't find a visionary he could work with," Enderle said.
Microsoft Corp. said Friday that CEO Steve Ballmer will retire within the next year. Ballmer has worked at the company for the past 33 years, and has held the top job since 2000. Here are some biographic details on Ballmer:
Name: Steven Ballmer
Born: March 24, 1956. Ballmer grew up near Detroit. His father was a manager at Ford Motor Co.
Occupation: Chief executive officer of Microsoft Corp., which is headquartered in Redmond.
Education: Bachelor's degree in mathematics and economics from Harvard University. He attended the Stanford Graduate School of Business but dropped out to start working at Microsoft.
Career: Before joining the company, Ballmer worked two years at consumer products maker Procter & Gamble Co. as an assistant product manager. He started working at Microsoft in 1980. Before becoming CEO, Ballmer's roles at Microsoft included senior vice president of sales and support, senior vice president of systems software and vice president of marketing. He was named CEO in 2000, taking over the job from Microsoft founder Bill Gates.
Quote: "There is never a perfect time for this type of transition, but now is the right time," Ballmer said Friday in announcing his retirement.
-- Associated Press