BILL GATES, the chairman and co-founder of Microsoft, the software giant, is to step back from the day to day running of the company to concentrate on his charitable foundation.

Mr Gates, who founded the world’s largest software company with Paul Allen, a childhood friend, in 1975, will continue as the chairman after transferring his duties over two years.

Mr Gates said: “This is a hard decision for me. I’m very lucky to have two passions that I feel are so important and so challenging. As I prepare for this change, I firmly believe the road ahead for Microsoft is as bright as ever.”

Mr Gates, the world’s richest man with an estimated wealth of $50 billion, is to concentrate on the Bill & Melinda Gates Foundation, the charity he set up with his father in 1994. The charity, the world’s biggest, with an endowment of $28.8 billion, funds medical research and education.

The changes at the top will put an outsider, Ray Ozzie, currently chief technical officer, into the role of as chief software architect. Mr Ozzie, the designer behind Lotus Notes, joined the company last year. He is central to Microsoft's push to transform software into a service and maintain the firm's market dominance. Craig Mundie, also chief technical officer, will take the new title of chief research and strategy officer. In January 2000 Mr Gates assumed the role of chief software architect and Steve Ballmer stepped up to be chief executive. Mr Ballmer will be responsible for all day-to-day operations and business strategy.

Mr Ballmer said: “Bill and I are confident we’ve got a great team that can step up to fill his shoes and drive Microsoft innovation forward without missing a beat.” The changes come as Microsoft faces increasingly competitive threats from rivals such as Google.

Mr Gates, 50, and Mr Allen started Microsoft in 1975. Eleven years later Microsoft went public. For the past six years Mr Gates has focused on Microsoft’s software development.

Mr Mundie, 56, joined Microsoft in 1992 to create and run its ConsumerPlatforms division, which was responsible for non-personal computer software. He also started Microsoft’s digital TV efforts. His responsibilities include global technology policy and various technical and business incubation efforts. Mr Ozzie and Mr Mundie will continue to report to Mr Gates. At an unspecified time during the two-year transition period, they will shift to reporting to Mr Ballmer.

The changes were announced after financial markets closed. Earlier, shares in Microsoft rose 19 cents, or 0.87 per cent, to close at $22.07 on the Nasdaq. The shares lost 10 cents in after-hours trading.

Gene Munster, an analyst with Piper Jaffray, said that many investors had expected Mr Ballmer also to announce his plans for departure. “What is surprising is that Ballmer is staying,” he said.

Charles DiBona, an analyst for Sandford Bernstein, said: "It was certainly a surprise but it is something that is inevitable."

THE NEW LINE-UP

Bill Gates steps back to concentrate on his charity but remains chairman

Ray Ozzie becomes chief software architect

Craig Mundie becomes chief research and strategy officer

Steve Ballmer remains chief executive officer in charge of strategy

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