Bill Gates, who built Microsoft MSFT into the most powerful company in the world and in the process became the world’s richest person, announced today that he is stepping down as chief executive officer to concentrate on software strategy.
Steve Ballmer, Gates’ former college classmate and long-time right-hand man, was named to replace him in the top job at the world’s largest maker of PC software, adding the position to his current title of president. Ballmer also will join Microsoft’s board of directors.
Gates, 44, said he will remain as chairman of Redmond, Wash., Microsoft, while also taking the title of the chief software architect. He said his new role “will allow me to spend almost 100% of my time on new software technologies. It’s an exciting evolution for me and a very good transition for the company.
“Although I’ve been able to spend more time on our technical strategy since naming Steve as president in July 1998, I felt that the opportunities for Microsoft were incredible, yet our structure wasn’t optimal to really take advantage of them to the degree that we should,” Gates said.
Gates’ surprise announcement comes as Microsoft faces a possible move by the government to break the company up into two or more pieces as a result of a recent antitrust trial.
It was uncertain what would happen to the management of Microsoft, including Gates and Ballmer if that happens.
Analysts conjectured that Gates may have grown weary of Microsoft’s prolonged battle with the Justice Department, which accused the company of using its monopoly on operating systems to control the market for desktop software. Microsoft Windows runs nine of every ten PCs in the world.
“The DOJ [Deparment of Justice] action took all the fun out of the job, and Gates wants to go out on a high point rather than a low point,” said analyst Rob Enderle of Giga Information Group.
Microsoft’s stock dropped $4 in after-hours trading following Gates’ announcement, suggesting that investors think a change at the top might hurt the company. During the regular session the shares gained $2 to $107.81.
Ballmer, 43, said he was “very excited and very honoured,” to have been tabbed to head the software behemoth, whose market value of nearly $558 billion is the most of any public company. He said his job will be to transform the company around new software geared toward the Internet and the next generation of Windows services.
Gates and Ballmer have known each other since 1973 when both were students at Harvard.
Gates co-founded Microsoft in 1975, and Ballmer joined the company in 1980. He has held several positions in Redmond, where he has earned a reputation as a tireless cheerleader and evangelist for new products.
As of today, Gates’ personal wealth was estimated at nearly $85 billion, nearly all of it in Microsoft stock. Ballmer’s Microsoft holdings are worth almost $26 billion.
In addition to focusing on new Microsoft products, Gates is expected to devote more time to pet projects, including modelling the human brain, as well as to the charitable foundation that he runs with his wife, Melinda.