Microsoft CEO Steve Ballmer to Retire

Microsoft CEO Steve Ballmer

Microsoft CEO Steve Ballmer will retire within a year

For the last two years, there have been a growing number of calls from investors, observers, and other audiences for Microsoft Corp. CEO Steve Ballmer to be fired. The bombastic chief executive would not be pushed — so Friday morning, Microsoft announced he will jump. Ballmer will retire as the company’s CEO within the next year, Redmond announced, as soon as the company finds a successor.

In a statement announcing his intentions to retire, Ballmer said the company needs “a CEO who will be here longer term” for the company’s new direction as a devices and services company. While Ballmer championed and launched the company’s new approach to the market, the 57-year-old executive — a 33-year Microsoft veteran — was never going to be around to see the journey to completion.

“There is never a perfect time for this type of transition, but now is the right time,” Ballmer said.

Ballmer will continue his duties as the company’s CEO until the search for a new CEO can be completed. The company announced John Thompson, lead independent director of the board of directors, will chair a committee to find a new CEO. That committee will also include Microsoft co-founder, former CEO, current chairman and longtime Ballmer friend Bill Gates, as well as Chuck Noski and Steve Luczo, chairs of the company’s audit and compensation committees, respectively.

“As a member of the succession planning committee, I’ll work closely with the other members of the board to identify a great new CEO,” Gates said in the prepared statement. “We’re fortunate to have Steve in his role until the new CEO assumes these duties.”

Ballmer’s decision to retire comes just six weeks after a seeping re-organization of Microsoft that reinforced the new “devices and services” approach, creating major product groups for its Windows operating systems, its hardware devices, applications and services, and cloud and enterprise products.

Ballmer has been with Microsoft since 1980 — the company’s 30th employee. Before joining the company, he had been friends with Gates at Harvard. Throughout the 1980s and 1990s, he led various groups within the company, including sales and support, before ultimately being named president of Microsoft in July 1998. Less than two years later, in January 2000, he was named CEO, taking over day-to-day business command of the company while Gates, as chairman and chief software architect, retained control of the company’s technology strategy and vision.

“I am proud of what we have achieved. We have grown from $7.5 million to nearly $78 billion since I joined Microsoft, and we have grown from employing just over 30 people to almost 100,000,” Ballmer wrote in an internal e-mail shared by Microsoft. “I feel good about playing a role in that success and having committed 100 percent emotionally all the way.”

Ballmer, initially hired as Microsoft’s first professional sales director, has had a successful run, increasing Microsoft revenues and profits over the last decade. Nevertheless, Ballmer is highly criticized by investors and analysts for missing out of several major trends, including smartphones and tablets.

Revenues and profits have climbed under Ballmer’s watch, but the market cap valuation has plummeted. Microsoft is worth approximately half of what it was when he took over.

Revenues and profits aside, Microsoft has marked several major flops under Ballmer’s leadership. The poorly received Windows Vista arguably set back Microsoft against rivals such as Google Inc. and Apple Inc. The Surface tablet was late to market and has created much tension between Microsoft and traditional OEM and reseller partners. While Microsoft’s smartphone sales are climbing, Microsoft essentially gave up the mobile handset market to Apple in 2007 when Ballmer said there was no chance the iPhone would get any significant market share.

Microsoft partners have placed a lot of their frustrations and challenges in working with Microsoft on Ballmer’s shoulders. Solution providers tell Channelnomics that Microsoft — and Ballmer’s — zeal for catching up with Apple and Google is ruining its longstanding relationships. In the recent 2112 Channel Conflict Report, Microsoft ranked second only to Dell in having poor channel conflict management.

The company made no further statements regarding potential future CEOs, but the high profile afforded to COO Kevin Turner over the last few years would certainly suggested he was being groomed for the role. Microsoft has announced that executive recruiting firm Heidrick & Struggles International will work with the succession planning committee, which “will consider both external and internal candidates.”

Ballmer’s statements leave no indication of his future plans, but with the Forbes 400 putting his personal value at $15.2 billion this year, he certainly has options.

With files from Larry Walsh.