By Dina Bass, Peter Burrows and Jonathan Erlichman

Bloomberg News

Microsoft's board is preparing to make Satya Nadella, the company's enterprise and cloud chief, chief executive officer and is discussing replacing Bill Gates as chairman, according to people briefed on the process.

One person the board is considering to take the place of co-founder Gates as chairman is former Symantec CEO, who is now Microsoft's lead independent director, John Thompson, said the people, who asked not to be identified because the process is private. Gates may still play an active role at the Redmond, Wash.-based company that he founded in 1975, depending on the wishes of the board and new CEO, said the people.

Nadella emerged as one of the stronger candidates to replace departing CEO Steve Ballmer weeks ago, people familiar with the search have said. The plans aren't finalized, said the people.

Thompson, who is heading the CEO search, wrote in a blog post last month that the board plans to complete a search for CEO in the "early part of 2014." He said the board started with more than 100 candidates and has since narrowed the list. Ballmer said last August that he planned to retire within a year.

Frank Shaw, a spokesman for Microsoft, declined to comment.

The company also considered internal candidates including Executive Vice President Tony Bates and Chief Operating Officer Kevin Turner. External candidates have included former Nokia Oyj CEO Stephen Elop, Ford Motor Co. CEO Alan Mulally, Qualcomm Inc. CEO-elect Steve Mollenkopf and Ericsson AB CEO Hans Vestberg, people familiar with the search have said.

Some CEO candidates have declined to be considered or dropped out of the running. Vestberg has said he plans to stay at Ericsson. Mulally took himself out of the running earlier this month.

Nadella joined Microsoft in 1992 and has had leadership roles in cloud services, server software, Internet search and business applications.