"If [Ballmer] gets to pick a clone of himself with the same direction and strategy, Microsoft is in big trouble longer term," contended Jack Gold of J. Gold Associates. "What they need is a leader with a new direction, a visionary who can bring back innovation and provide products people are willing to spend money on. Unless such a leader is found, Microsoft is in for a continued, albeit slow, decline."
Outsiders won't have it easy. "Walking into the Microsoft culture is not without its own challenges," Cearley pointed out.
So what about Gates, who remains chairman of the board? Gates' name has been regularly trumpeted as a replacement for Ballmer, a possible savior if he returned to again run the firm he co-founded with Paul Allen in 1975.
While most dismissed that talk again Friday as delusional, Cearley saw it as a possibility -- long shot and temporary, though it would be.
"We are at the beginning of a long search, and there are many things that can happen over the next year that could change," Cearley said, outlining his Gates theory. "If things fall apart, if the company is on an incredibly negative path, or the reorganizational change isn't working, that's a scenario where you could see Gates coming back as a stabilization CEO."
The choice, certainly, will be up to Gates. He has his foundation to run, and from all signs, is happy doing that. But he also remains a major shareholder, with nearly 398 million shares as of late May, according to regulatory filings. At Friday's closing price, Gates' stake equaled $13.8 billion. That's a lot of money to risk with a newcomer, inside the company or not.
"He will be a primary voice on the selection committee," said Cearley. "But whether he becomes more actively involved in the company is up to him."
The new CEO, whether from inside or outside the company, will be in for a tough time, analysts agreed.
Microsoft is at a crossroads, something Ballmer himself admitted during interviews Friday, with Windows revenue declining as PC sales badly slump. And even though it remains an extremely profitable business, revenue from its best-producing groups is still tied to Windows' success. More importantly, the company is increasingly seen as having missed the boat on the switch to mobile and the consumerization of technology, areas where it may be too far behind to catch up to Google and Apple and a blizzard of smaller fry that add users at astounding rates.
That's why Ballmer's retirement announcement, big though it was on Friday, will pale in comparison to what Microsoft does after he's gone.
"Steve's leaving is a major event because he's been such a part of the Microsoft story for so long," said Cearley. "But the real watershed will be the person who follows him."