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Who is jockeying to replace Microsoft’s Steve Ballmer?

The pending retirement of a prominent senior Microsoft executive, announced this week, may provide clues as to who is likely to take the reins of the company when CEO Steve Ballmer retires in a few years.

Whoever ultimately ends up in Microsoft’s corner office promises to change the face of computing for better or worse in the years to come.

The executive, 20-year company veteran Craig Mundie, will retire in 2014 when he turns 65. In the meantime, he will serve as senior advisor to Ballmer.

What may be most important in shakeups like this one, however, is often not who leaves but who stays.

Microsoft co-founder Bill Gates named Ray Ozzie and Mundie in 2006 to replace himself, when he left his day-to-day role at the company. Ozzie, who had founded Lotus and has the respect of both businesspeople and developers alike, had visions of a “meshed” world where all of a user’s information is available on any device, anywhere, any time. His job title was chief software architect, Gates’ former title.

Though not often mentioned these days, Ozzie also championed Windows Azure, Microsoft’s public cloud offering, before leaving the software giant in 2010.

Mundie, meanwhile, has held the title of chief research and strategy officer, which included oversight of Microsoft Research (MSR) as well as performing the role of the company’s policy liaison to domestic and international institutions and governments.

Perhaps most notably, however, Mundie’s replacement will be another 20-year Microsoft veteran, Eric Rudder, who recently received the title of chief technical strategy officer. Overseeing MSR is one of his new responsibilities as well as Microsoft’s Trustworthy Computing initiative.

What’s more, until a few years ago Rudder was one of a handful of Microsoft senior executives on what was considered the shortlist to replace Ballmer when he retires. But the presumed front runner for the past several years was Steven Sinofsky, the vice president responsible for launching Windows 8 in October, Windows 7 three years ago, and head of Office for more than a decade. He departed Microsoft — some say he was pushed out — almost immediately after last fall’s launch.

For several years, Rudder’s star seemed to be in decline after a stellar start as chairman Bill Gates’ technical assistant. Over the years, Rudder also has garnered broad experience in both the technical and business aspects of running growing tech businesses. His job roles have included senior vice president of server and tools — today, still one of the anchors of the company’s nearly $70 billion bottom line. He missed several promotions though and virtually dropped out of sight.

Rudder is respected by both business and technical people, and he has a general good temperament — not aggressive or confrontational like Ballmer and Gates before him.

The reshuffling was outlined in a memo sent in mid-December by Ballmer, a copy of which was obtained by TechTarget. The story went public earlier this week in published reports that cited changes made to online biographies for Mundie and Rudder on Microsoft’s executive bios site.

Microsoft and Rudder aren’t saying if he would get the nod, or whether he would even want the chief executive’s title.

Of course, Rudder isn’t the only name floated by company observers as a possible replacement for Ballmer, when the day comes. One rumored candidate for the job is Kevin Turner, Microsoft’s chief operating officer.

In contrast to Rudder, however, Turner does not come from a primarily technology background — but rather from retail. Before joining Microsoft, Turner logged almost 20 years at consumer giant Wal-Mart. Because of that perception that he’s more of a bean counter than an inspiring technological leader, many employees think of Turner as CEO as potentially ruinous.

But at this point, Rudder’s star seems it may on the rise again as the company begins to redefine and reposition itself to focus on business customers, or on consumers, or possibly even a combination of the two. What course is best for IT customers is an open question.

Who would you pick to replace Steve Ballmer?

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