But it also marked the ascension of an Indian-born executive to the top of a global powerhouse—a milestone marked by people of Indian descent worldwide.
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When the news was announced, Twitter filled with posts celebrating Nadella's appointment at the world's largest software company.
"For someone who is South Asian to be at Microsoft, it's a really big deal for the Indian community here as well as in India, where people are ... celebrating his success and taking a lot of pride in his achievement," said Sree Sreenivasan, the chief digital officer at the Metropolitan Museum.
The event will spur Indian technologists in the U.S. to pursue high-profile positions, Sreenivasan predicted.
"There have been people who have felt they have been pigeonholed as engineers and believed they cannot move up in certain ways," he said. "One thing this [signals] is that you don't have to be just a rank and file—you can be a leader."
People in India are also inspired by Nadella's promotion, said Trip Chowdhry, managing director at Global Equities Research.
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"This appointment is considered to be motivational for those in other countries. It lifts and drives people back home," he said. "They take pride in his achievement, and it motivates them that they can also work hard and maybe do the same."
Microsoft, and founder Bill Gates, still carry a lot of clout in South Asia, which is another reason Nadella's promotion means so much to people in the region.
"For a lot of Americans, there's this feeling that Microsoft is not as dynamic as it used to be. But in Asia there's still the power of the name and Bill Gates," Sreenivasan said. "What he has done after leaving Microsoft, working so much in the developing world to help places ... like India—he is an icon."
That Nadella could rise to the CEO position represents the American opportunity to which many in developing countries, such as India, aspire, he said.
"They could have hired anyone in the world, and they chose him," Sreenivasan said. "This could only be possible in the U.S."
—By CNBC's Cadie Thompson. Follow her on Twitter @CadieThompson.