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Microsoft CEO Steve Ballmer, who took over the helm of the world’s largest software company from founder Bill Gates, will retire within the next 12 months.
Microsoft Corp. did not name a successor. The company said it is forming a search committee, which will include Gates, and Ballmer will stay on until a replacement is found.
“There is never a perfect time for this type of transition, but now is the right time,” Ballmer said in a statement released by the Redmond, Wash., company.
Microsoft shares shot up 8 percent in morning trading following the news.
It’s been less than two months since Microsoft announced a sweeping reorganization of its business in an attempt to reignite competition with faster-moving rivals such as Apple and Google.
Response to the newest version of Microsoft’s flagship Windows operating system has been lukewarm. And Microsoft, along with other companies that thrived in the era of personal computers, are scrambling to transform their businesses as people come to rely more and more on smartphones and tablets.
In his statement, Ballmer noted that the company is moving in a new direction and needs a CEO that will be there for the longer term.
Microsoft, he added, “has all its best days ahead.”
Ballmer, 57, met Microsoft founder Bill Gates in 1973 while they were living down a dormitory hall from each other at Harvard University. He joined Microsoft in 1980 to bring some business discipline and salesmanship to a company that had just landed a contract to supply an operating system for a personal computer that IBM would release in 1981.
Ballmer, a zealous executive prone to arm-waving and hollering, did the job so well that he would become Gates’ sounding board and succeed him as CEO in 2000. He has worked at Microsoft for 33 years, matching the tenure of Gates, who left the company in 2008.
“It’s a tad surprising, but every other business head has been rotated out,” said BGC Financial analyst Colin Gillis. “They swapped out all their segment heads over the past few years. The only one they haven’t changed is the CEO.”
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.
ROBIN YOUNG, HOST:
From NPR and WBUR Boston, I'm Robin Young. It's HERE AND NOW. And the help wanted pages just got a new ad. Microsoft CEO Steve Ballmer is retiring. Ballmer was a Harvard classmate of Microsoft founder Bill Gates. He joined Microsoft in 1980 as its first business manager, replaced Gates as CEO in 2000 and became Microsoft's biggest cheerleader. Here's a video from a presentation that went viral.
(SOUNDBITE OF VIDEO)
STEVE BALLMER: I have four words for you. I love this company. Yeah.
YOUNG: But did Steve Ballmer fail to bring the company he loved into the future? NPR technology correspondent Steve Henn joins us. And Steve, Ballmer is actually going to leave within the year when a replacement is found. But put this in context. Microsoft certainly a huge company. But what boat was he accused of missing?
STEVE HENN, BYLINE: Well, actually, lots of boats. So the first was probably search. You know, Microsoft fell well behind Google on search and has been struggling now for more than a decade to catch up, spending billions of dollars but still not really capturing much market share there with Bing. Then he missed the mobile phone revolution. When the iPhone first came out, Ballmer famously mocked it. Then he missed tablets. When the iPad came out, he made comments to NPR's Laura Sydell suggesting tablets really wouldn't be such a big deal.
YOUNG: Oh dear.
HENN: So there have been a number of big trends that have pushed Microsoft off its game that he hasn't been seen as responding too quickly or nimbly.
YOUNG: But what did he do for the company?
HENN: Well, he was certainly a source of stability. You know, Microsoft is still an enormous company. It has roughly $70 billion in cash. It's profitable. There are more - well more than a billion PCs that run Microsoft products around the world. It has a big cloud computing business. He bought Skype and incorporated Skype into Microsoft. He built the Xbox, which is another billion-dollar business. So the company has done a lot, but the biggest trends in technology have sort of left it behind.
YOUNG: Yeah. This idea that people are far more using their mobile devices than software for PCs, and that's where Microsoft really shines. But we understand that in his statement today he said there's no good time for something like this but now is the right time. And by the way, investors seem to agree. Microsoft shares jumped more than 8 percent in premarket trading.
YOUNG: He meant, though, Ballmer meant that they were in the middle of some sort of revamping. What is that?
HENN: Well, Ballmer has said that Microsoft is no longer going to be purely a software company. It's going to be a devices and services company. Another big trend in computing is that instead of buying, you know, a CD, a software or downloading software for your PC and installing it, many products are now available on the cloud. So Google sells a corporate version of Gmail that competes directly with Microsoft Outlook. Microsoft responded to that by trying to sell software as a service.
So that's one big pivot the company is in the midst of. The other is this idea that it's going to, like Apple, build its own devices that run its software. So last year it launched the Surface tablet, and it's struggled somewhat with that. But that's - those are two huge transitions the company is right in the middle of now.
YOUNG: And he says he wants - he's 57 or eight, I think, and he wants someone who will be able to take the company into the future. Bill Gates is said to be part of the special committee to search for a replacement. Just a few seconds here. But these names become big names in business. Does one jump out at you that might take this helm?
HENN: Well, I think the former head of Skype, Mr. Bates - I'm forgetting his first name - is widely seen as a strong internal candidate. But I think Microsoft really needs to find someone with a vision to make the PC, its core strength, relevant again.
YOUNG: Well, I'm sure that fellow would just as soon - he's happy to be known as the creator of Skype. NPR's technology correspondent Steve Henn. Thank you so much.
YOUNG: We'll take a break and be back with a look at Al-Jazeera America coming to a TV near you. HERE AND NOW. Transcript provided by NPR, Copyright NPR.
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