Steve Ballmer

I bet you haven’t seen this coming. Microsoft’s controversial and enthusiastic chief executive officer Steve Ballmer will retire within the next twelve months, the company said in a media release.

The company cunningly chose Friday to break the unexpected news so investors have the time to chew on the development over the weekend.

The Windows giant said Ballmer will retire as CEO upon the completion of a process to choose his successor. In the meantime, Ballmer will continue as CEO and will lead Microsoft “through the next steps of its transformation to a devices and services company that empowers people for the activities they value most”

Interestingly enough, Microsoft shares went up as much as eight percent in pre-market trading, making Ballmer himself $1 billion richer in the process and clearly indicating investors couldn’t be happier with the move.

The company quoted the outgoing CEO as saying:

There is never a perfect time for this type of transition, but now is the right time. We have embarked on a new strategy with a new organization and we have an amazing Senior Leadership Team.

My original thoughts on timing would have had my retirement happen in the middle of our company’s transformation to a devices and services company.

We need a CEO who will be here longer term for this new direction.

Note how Ballmer defines Microsoft as “a devices and services company” rather than a “software and services” company, which they used to say for years. The change of heart is actually part Microsoft’s recent sweeping reorganization effort and the streamlining of its many divisions in order to foster tighter collaboration between its teams.

Steve Ballmer (sits at the table)

The Board of Directors has appointed a special committee to work with executive recruiting firm Heidrick & Struggles International to direct the CEO search process. The committee includes Chairman of the Board Bill Gates and Ballmer himself, with Microsoft saying it will be considering both external and internal candidates.

Bill Gates said:

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. We’re fortunate to have Steve in his role until the new CEO assumes these duties.

A new CEO will be tasked with working with the company’s senior leadership team “to chart the company’s course and execute on it in a highly competitive industry”.

Remember how critics for years used to call Apple out for not making its succession planning public? After Tim Cook took over the helm it became evident Steve Jobs and Co. had been grooming a deep bench of next-generation of Apple executives.

The question is: does Microsoft have a succession strategy? From what I could glean from Gates’s words, looks like Microsoft hasn’t devised effective paths to a post-Ballmer Microsoft, especially now that it’s willing to consider external candidates for the top job.

Many watchers would agree that Microsoft under the outspoken CEO’s leadership has continued milking its Office and Windows franchise for what it’s worth, but failed to establish itself as the leader of the post-PC world.

Ballmer joined the Windows maker in 1980, becoming an employee #13 and the first real business manager. He succeeded co-founder and CEO Bill Gates who hired him in 2000.

With the exception of Microsoft’s profitable Xbox business, other segments have stagnated as Google with its Google Apps cloud office suite and Apple with its mobile and desktop devices continued chipping away at Microsoft’s share of the market.

Ballmer sent an internal email to staff explaining the move, here it is in its entirety:

I am writing to let you know that I will retire as CEO of Microsoft within the next 12 months, after a successor is chosen. There is never a perfect time for this type of transition, but now is the right time. My original thoughts on timing would have had my retirement happen in the middle of our transformation to a devices and services company focused on empowering customers in the activities they value most. We need a CEO who will be here longer term for this new direction. You can read the press release on Microsoft News Center.

This is a time of important transformation for Microsoft. Our new Senior Leadership team is amazing. The strategy we have generated is first class. Our new organization, which is centered on functions and engineering areas, is right for the opportunities and challenges ahead.

Microsoft is an amazing place. I love this company. I love the way we helped invent and popularize computing and the PC. I love the bigness and boldness of our bets. I love our people and their talent and our willingness to accept and embrace their range of capabilities, including their quirks. I love the way we embrace and work with other companies to change the world and succeed together. I love the breadth and diversity of our customers, from consumer to enterprise, across industries, countries, and people of all backgrounds and age groups.

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. I feel good about playing a role in that success and having committed 100 percent emotionally all the way. We have more than 1 billion users and earn a great profit for our shareholders. We have delivered more profit and cash return to shareholders than virtually any other company in history.

I am excited by our mission of empowering the world and believe in our future success. I cherish my Microsoft ownership, and look forward to continuing as one of Microsoft’s largest owners.

This is an emotional and difficult thing for me to do. I take this step in the best interests of the company I love; it is the thing outside of my family and closest friends that matters to me most.

Microsoft has all its best days ahead. Know you are part of the best team in the industry and have the right technology assets. We cannot and will not miss a beat in these transitions. I am focused and driving hard and know I can count on all of you to do the same. Let’s do ourselves proud.

Steve

I’m not sure what to think of the farewell memo.

http://www.youtube.com/watch?v=tGvHNNOLnCk

At any rate, Ballmer selling Windows 1.0 immediately comes to mind.

This, too. Talk about the energy and enthusiasm.

And let’s not forget about this one, it’s gold.

I guess critics who’ve been slamming Ballmer for being an out of touch CEO are going to have a field day over today’s development.

Here’s a quick poll for you.


We know Scott Forstall is available.

So, is this the best news Microsoft has had in years?