Passing the torch
The news follows a gradual passing of the torch at Microsoft that began in January 2000, when Mr. Gates relinquished the role of CEO to Steve Ballmer, although Microsoft insiders say he continues to have a consistent presence at the company.
Mr. Gates told a press conference that the day's news was not so much a retirement as a "reordering of my priorities."
That reordering comes at a time when the company is struggling to become a major online ad player. Microsoft has much riding on AdCenter, its bold move to get back into the online ad game after lagging behind Google and Yahoo. AdCenter's biggest immediate impact will be in the lucrative search space, where MSN's 11% share lags Google (49%) and Yahoo (22.5%).
Shifts in emphasis
"It's not terribly surprising, but anytime an icon like this steps down it's big news and will have some interesting effects," said Mike McGuire, research director for Gartner Research. "Overall, it's very likely you're going to see some shifts in the emphasis of corporate strategy -- where the strategic bets get placed."
Mr. Gates addressed MSN's top marketers at the company's Strategic Account Summit in early May, affirming Microsoft's commitment to the advertising space.
"[Google has] done a great job on their search and what they've done with advertising," he said then. "We will keep them honest in the sense of being able to be better at a number of those things and bring a new angle to it. ... We're underestimated, that doesn't happen that often."
As part of his announcement today, Mr. Gates handed over the title of chief software architect to Ray Ozzie and appointed Craig Mundie chief research and strategy officer. Mr. Gates will retain the title of chairman.