Tom Osborne announced his retirement as Nebraska's athletic director, effective January 1, 2013; he'll transition to "Athletic Director Emeritus" for six months after that to aid the next athletic director in the transition as well as to help see initiatives like the East Stadium expansion project and the new Pinnacle Bank Arena through to completion. Don't be surprised if the "Emeritus" position lasts longer than that; Osborne is an icon in and around Nebraska, he will always have a spot at Nebraska.
The process to identify Osborne's successor is already underway. Osborne notified chancellor Harvey Perlman in August of his plans, and Perlman immediately began the search process. Perlman has hired Jed Hughes to advise the search process. Hughes has an impressive record with finding candidates to fill executive level sports openings. He helped Michigan hire athletic director Greg Brandon and football coach Brady Hoke, as well as helped Green Bay hire Packers CEO Mark Murphy.
Perlman has assembled a group of 12-15 people to advise him, but it's not a search committee. Perlman will make the decision, and in fact, has already begun interviewing candidates. Perlman is going to try to avoid the circuses that occurred with the 2003-04 failed coaching search that resulted in the hiring of Bill Callahan. Nearly every candidate for this job already has a job and any leaks that they are interested in the Nebraska job will cause problems with those positions. (See the criticism that Bo Pelini faces every time someone mentions him for another job?)
Some candidates that are inevitably going to be raised are Jamie Williams and Paul Meyers, who are currently assistant athletic directors at Nebraska. Marc Boehm might get a mention as well, but let's not forget that Husker basketball has been an issue throughout his time in Lincoln. Nebraska-Omaha athletic director Trev Alberts will be mentioned, though his background probably isn't experienced enough to get the Husker job. (And some people who haven't followed all of the details and history of the problems UNO has had prior to Alberts' arrival in Omaha still criticize him over UNO's decision to drop football and wrestling.)
External candidates probably will include Greg Byrne at Arizona and Russ Bjork at 'Ole Miss. If Byrne's name sounds familiar, it should. His father, Bill, took over for Bob Devaney as Nebraska's athletic director. He wasn't well loved in Lincoln, though people grew to respect "Dollar Bill" a bit more during the Steve Pederson error.
Nebraska will have no shortage of candidates for this job. It's not a question of who can they find, but rather who is the best fit. It shouldn't necessarily be a "Nebraska guy"; Husker fans still suffer the sting of Pederson's time. It doesn't even have to be someone who's familiar with Nebraska.
It does have to be someone who can understand how the Nebraska athletic department works. The new athletic director will likely want to change things around; that's to be expected and, in fact, encouraged. But the new athletic director needs to understand that Husker sports are not his personal plaything and something that he can do whatever he wishes to. It is a state-wide possession that he will be entrusted with to steward and lead moving forward. Tom Osborne will be a part of the Nebraska athletic program in one form or another until the day he dies, and while Osborne won't second guess his successor publicly, the fans and former players will.
As for Osborne himself, it's unclear what Osborne will do next, other than (jokingly) clean the garage up. (That was a request from Nancy.) Almost certainly, he'll immerse himself back into his TeamMates mentoring program. A man like Osborne won't sit idle for long. Heck, with Dave Heineman facing term limits, another run at political office in 2014 can't be completely ruled out. (I'd put that as doubtful, but everything is up for discussion.)
Like his first retirement in 1997, today is a bittersweet day for Nebraska athletics. Osborne denies that health issues had any impact on his decision, but considering his age and past health concerns, everybody knew this day would come.