Though investors cheered the news on Friday, Gillis cautioned that it could be a "tough 12 months" for the company.
The obvious successor — former Windows head Steven Sinofsky — got booted by Ballmer, he said.
Sinofsky left the company shortly after the launch of Windows 8 last year. He recently announced that he joined the venture capital firm Andreessen Horowitz.
Veteran executive Julie Larson-Green, the head of Microsoft's devices and studios engineering group, has been floated as a potential successor. She was promoted to her most recent position in July, after being tapped in November to lead all Windows software and hardware engineering.
Although the company said Friday that it will consider both internal and external candidates, some analysts are betting that the company's next leader will come from outside.
Walter Pritchard, an analyst with Citi Investment Research, said Microsoft's expected focus on external candidates will make it tough to predict who will become the next CEO and what direction they will take it in. He added that the search will likely take a significant amount of time, potentially the entire 12 months Ballmer has said he will stay.
When Ballmer joined Microsoft in 1980, was populated with geeky programmers, led by Gates and the other founder, Paul Allen. Ballmer had already held a product management job at Procter & Gamble and was attending Stanford University's graduate school of business when Gates convinced him to move to the Seattle area to whip Microsoft into shape.
Ballmer dropped out of Stanford, but only after Gates agreed to give him an 8.75 percent stake in the then-tiny startup that still hadn't even incorporated as a company. It turned out to be one of the world's greatest business partnerships. By late 2012, Ballmer had accumulated an estimated fortune of nearly $16 billion from his initial Microsoft stake and additional stock options he later received.