Microsoft CEO Hunt: Why There Are No Clear Contenders (Update 1)

Tickers in this article: MSFT NOK

Updated from Jan. 23 to include additional comments in the eighteenth paragraph.

NEW YORK ( TheStreet) -- With the most exciting, external Microsoft CEO candidate names now removed from the speculation ring, internal executives are once again back in the limelight for the top job in Redmond.

The possibility an external candidate will fill the new CEO role has been looking more and more unlikely lately, with recent talk that co-founder, current chairman and former CEO Bill Gates wants to continue having a voice at the company even after a new CEO has been installed. "Microsoft will always be his baby," said Norman Young, senior equity analyst with Morningstar, in an interview.

There's also speculation that some want to see him return to the helm, following the path of other tech company founders such as Apple's Steve Jobs, Google's Larry Page, Yahoo!'s Jerry Yang and Dell's Michael Dell.

Gates still plays a role in Microsoft's decision-making processes, serving as an advisor on key development projects. While he does not have veto power over the appointment of the next CEO, he remains the largest individual shareholder at the company and is still highly respected both within the firm and the tech community. "I don't think it would be especially difficult logistically for him to come back to run the firm," Young noted.

Though it's unlikely Gates would want to return full-time as CEO -- he's publicly stated that the Bill & Melinda Gates Foundation remains his top priority -- it is likely he'll want to stick around until the new CEO has a better grasp of the firm's issues. If that's true, it could very well be discouraging outside candidates.

"Some people fear that with some of the old guard around, a new outsider CEO might be constrained from making potentially bold decisions that depart significantly from the current strategy," Young explained. "The rumors that Bill Gates will likely be more involved with the firm going forward may prove to be a possible deterrent for any candidate as there might be questions about who is really in charge."

"If this is indeed the plan, then it will be a difficult path for Gate, the board, and the company to navigate," he added.

On the other hand, there's a relatively higher chance that an insider, less likely to rock the boat, could be more tolerant to some strategic micromanagement. This may not necessarily be what investors are looking for, but it may please the board. After last year's sweeping organizational changes keying in on devices and services, the board likely isn't eager to see any drastic changes for now.

"Microsoft is so heavily invested in the current 'Devices and Services' strategy at this point that it would be hard to roll back, in my view," said Tony Ursillo, tech analyst at asset manager Loomis Sayles & Co.