Microsoft CEO Steve Ballmer to step down

Ballmer to retire in 2014; Microsoft is already looking for a successor

Microsoft CEO Steve Ballmer gives the keynote address at the company's Build conference in San Francisco, June 26, 2013.
Robert Galbraith/Reuters

Microsoft CEO Steve Ballmer, known as much for his zany personality as his business acumen, announced Friday that he plans to retire from the world's biggest software company within the next 12 months.

After more than 13 years at the helm of Microsoft, Ballmer leaves a legacy of mixed results and a monumental challenge for his yet-to-be-named successor.

After the news broke, Microsoft's stock shot up as much as 9 percent, coming within two dollars of its 52-week high.

The timing of the announcement came as a surprise, and the lack of a succession plan suggested the recent setbacks may have spurred the company's board to act.

"Yes, this was a surprise, especially considering how close it is to the recently announced strategic overhaul towards devices and services," Sid Parakh, an analyst at McAdams Wright Ragen, told Reuters.

Ballmer himself acknowledged his decision was abrupt.

"There is never a perfect time for this type of transition, but now is the right time," he wrote in a memo to employees.

The committee to select a new CEO is to be chaired by John Thompson, the board's lead independent director, and includes Microsoft co-founder and Charman Gates, as well board members Chuck Noski and Steve Luczo.

It will consider both external and internal candidates and work with executive recruiting firm Heidrick & Struggles International Inc, according to Microsoft.

Ballmer 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 after growing the company from a tiny startup into the world’s most valuable company.

Ballmer, a forceful, often emotional leader, was regarded a great salesman rather than a brilliant technologist.

But the new millennium marked a dark period for Microsoft. As smartphones and tablet computers began to eclipse personal computers, detractors say Ballmer didn't take early threats from Apple and Google seriously enough.

"That is the most expensive phone in the world and it doesn't appeal to business customers," Ballmer said in a TV interview after the launch of Apple's iPhone in 2007.

Five years later, iPhone sales alone were greater than Microsoft's overall revenue.

As Microsoft's stature diminished, its market value followed. When Ballmer took the helm in January 2000, the company was worth more than $601 billion. Today, its value is less than half that amount, at nearly $270 billion.

The tech giant still has some reliable cash cows. Its software, like Windows and Office, is still popular. So is Microsoft Enterprise, which helps big companies run databases, and the Xbox gaming system. And about 70 percent of business email is still sent on Microsoft software.

Part of Microsoft's downfall stemmed from the bursting of a technology bubble that helped inflate the company's stock just before Ballmer took over.

But Microsoft also fell out of favor because many investors concluded that it was more interested in protecting its Windows franchise than coming up with new ideas and products to enter promising new markets.

By the time Ballmer took Google more seriously, and began pouring money into trying to build a better Internet search engine, Microsoft already was hopelessly behind. The company's online division lost billions of dollars without putting a serious dent into Google's dominance.

Google's rise riled the quick-tempered Ballmer, especially when key Microsoft engineers began defecting to the then-smaller company. After one Microsoft employee met with Ballmer in November 2004 to tell him he was leaving to join Google, Ballmer threw a chair across his office, according to a sworn declaration filed in a lawsuit. Ballmer then launched into an obscenity-laced tirade in which he vowed to "kill" Google.

By 2012, the iPhone was generating more revenue than Microsoft was as an entire company and giving people less reason to replace their PCs.

Less than two months ago, Microsoft unveiled a sweeping reorganization of its business in an attempt to catch up with Apple and Google, which have catered to consumers' increasing reliance on smartphones and tablets.

Still, Ballmer said Friday in a statement that while Microsoft is moving in a new direction and needs a CEO that will be there for the longer term, the company "has all its best days ahead."

Al Jazeera and wire services

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