Yesterday's announcement surprised analysts and investors but sent the group's shares initially surging more than 8%, reflecting belief that the company will benefit from new leadership as it tries to innovate and chase the market for smartphones and tablets.
"There is never a perfect time for this type of transition, but now is the right time," Ballmer said.
The company needed a leader who could see through its reorganisation and new strategy, he added.
"My original thoughts on timing would have had my retirement happen in the middle of our company's transformation to a devices and services company. We need a CEO who will be here longer term for this new direction."
Ballmer, 57, who succeeded founder
"I'll work closely with the other members of the board to identify a great new CEO," said Gates. "We're fortunate to have Steve in his role until the new CEO assumes these duties."
Ballmer first met Gates in 1973 when they shared a dormitory hall at
Under Ballmer the company developed successful products such as Windows XP and the Xbox 360. It has grown to a company with annual revenues of
Over the past decade however its share price has stagnated, in contrast to Apple,
"The stock is at a relative high at the moment. So it's better to leave on a high note rather than a low note," said
Last month Ballmer announced a sweeping reorganisation to focus more on hardware and make the company nimbler. It appeared to mimic Apple by dividing itself into functions each dedicated to a single purpose, such as operating systems, devices, apps or services.
"That's why today's news is even more surprising after Ballmer achieved such a big change for
Ballmer's personal wealth is estimated at
Leaving was an emotional, difficult decision, he told employees in a letter. "I take this step in the best interests of the company I love; it is the thing outside of my family and closest friends that matters to me most."
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