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Gates to step down from Microsoft

In recent months, Gates and Ballmer have been planning for the company's founder to step back further. The company began making plans in earnest at a board retreat in March. At that time, the directors made plans to discuss the subject on a mid-June conference call.

Gates, Ballmer and the rest of Microsoft's directors finalised plans on a conference call on Tuesday. However, the topic had been on both leaders' minds for some time, including when Microsoft made the decision to acquire Ozzie's Groove Networks back in 2005.

"Certainly Bill and I had begun that discussion," Ballmer said at the press conference.

While Microsoft continues to perform well financially -- it pockets nearly $1bn per month on quarterly sales of about $11bn -- the company's growth prospects and ability to compete with a new breed of competitors has caused its stock price to stagnate. Shares closed at $22.07 on Thursday in regular trading, down from a 52-week high of $28.38. Shares have slipped steadily since trading at about $35 in 2001. (Following the announcement of Gates' plans, shares slipped about 8 cents on Thursday.)

Gates, 50, founded Microsoft in 1975 with high-school buddy Paul Allen to sell a version of the Basic programming language for the Altair computer. The company had considerable success in the 1980s, partly as a creator of software applications for Apple's Macintosh computer.

But it was the company's decision to enter the operating system business that would propel it to the top of the technology world. The company's Windows OS runs on more than 90 per cent of the world's PCs. The success briefly pushed Gates' net worth, largely through his Microsoft holdings, past $100bn in 1999. Gates currently holds about 977 million shares.

According to Forbes magazine, he is the richest person in the world with a net worth of $50bn in 2005.

"Gates certainly has been a driving force in the industry, for better and for worse. I think if you go back to 1981, few would have predicted the degree to which one OS would unite 95 per cent of the PCs around the world," said Nathan Brookwood, an analyst with Insight 64.

"As Microsoft has grown, Gates' ability to contribute at a technical level has become ever less critical to the company's success. I would suspect it won't be very different from a technical standpoint with him not involved on a full-time basis," Brookwood said.

"He was really the first technology-oriented entrepreneur who was also a great businessman," wrote Stephen Baker, an analyst with NPD Techworld, in an email interview. "He kind of legitimised the idea that techies could make money and it was okay."

Gates put business success ahead of pure technology concerns when it came to his company, which probably accounts for some of the backlash against him and Microsoft from the technology community over the years, Baker wrote. "I think if you look at Google today, they are running into the same headwind, admired entrepreneurs doing good things technologically but now being challenged by needing to balance making money and building products."

And former Microsoft chief scientist Myhvold said that even after Gates is no longer roaming the halls daily, the company "has got tremendous opportunities ahead of it. Look at how dynamic IBM has remained."