Gates Steps Aside; Ballmer Now CEO

Bill Gates has relinquished his role as CEO of Microsoft, appointing current company president Steve Ballmer as his replacement. Ballmer will become a member of the Microsoft Board of Directors, effective January 27. Gates remains chairman of the company and has assumed a new title—Chief Software Architect—that indicates he plans to devote his time to formulating and implementing technology strategy.

As president of Microsoft since July 1998, Ballmer has run the company’s day-to-day operations and has played an increasingly high-profile leadership role. Except for a small research arm, the entire top-tier of Microsoft executives—including the heads of all product divisions, as well as sales organizations and operations divisions—have been reporting to Ballmer, not Gates, for 18 months. Within the company, the two men have been seen as an indivisible leadership unit. It is likely that with Gates as chairman the close working relationship will continue.

The difference now is that Ballmer, not Gates, has final responsibility for business decisions. As Gates turns back toward technology strategy, overall business strategy will be in Ballmer’s hands at a time when Microsoft faces both increasingly vigorous competition—from the surging Linux operating system to the new AOL Time Warner media giant—and a legal crisis over the Department of Justice’s (DoJ) antitrust suit.