Microsoft makes strong progress in hunt to replace Ballmer

Microsoft has reportedly dramatically narrowed its list of candidates to replace outgoing CEO Steve Ballmer.

Citing "sources familiar with the matter," Reuters says that around five people now make up the shortlist, which includes both internal and external figures.

The biggest remaining names are Stephen Elop, the former Nokia CEO and Ford chief Alan Mulally. Also reportedly in contention are Skype CEO Tony Bates, Microsoft head of cloud and enterprise Satya Nadella, and at least one other person.

Neither Microsoft or Nokia have yet commented on the speculation, but Ford spokesman Jay Cooney said, "There is no change from what we announced last November. Alan remains fully focused on continuing to make progress on our One Ford plan. We do not engage in speculation."

Back in August, Steve Ballmer announced that he would step down from his position at some point within the next 12 months, before weeping his way through his Microsoft farewell at the end of September.

There were rumours that Bill Gates was ready to pick up the mantle again, but this seems an unlikely scenario. In fact, voices within the company seem to think that Gates should step down from his position as Microsoft chairman, since it is felt that his presence could restrict the new boss from successfully implementing any radical changes.

As things stand, Mulally looks like the front-running contender, since several of Microsoft's top investors are reportedly pushing for the appointment of an expert in 'turnarounds'. The 68-year-old has been at Ford since 2006, and has been credited with transforming the company's fortunes.

Nothing is decided yet though, despite news that today's shortlist consisted of around 40 names just weeks ago. According to the sources, the recruitment process could take another few months.