Steve Ballmer succeeded Microsoft co-founder Bill Gates as CEO in 2000. On announcing his retirement this morning, he said, “There is never a perfect time for this type of transition, but now is the right time.” One question Ballmer’s exit brings up is how this might affect Microsoft’s nascent Xbox Entertainment Studios. Ahead of the E3 confab in June, Ballmer was escorted around town by the division’s president Nancy Tellem to lobby her closest Hollywood pals with an intimate preview of the new Xbox One capabilities. It was part of Ballmer’s effort to drum up exclusive content for Xbox One’s new customized TV and entertainment apps. But it was also, an insider told Deadline at the time, “to reiterate Microsoft’s commitment to transitioning its business to devices and services and to explaining that Hollywood entertainment is a big part of that. Microsoft in the past has just dipped a toe but now has a real commitment.” In July, Microsoft announced a sweeping reorganization that created teams to focus on various functions rather than dividing the company by products. In his statement today, Ballmer said, “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.” MarketWatch notes that Microsoft has more than tripled in size since Ballmer took over, but revenue growth has stalled recently as PC sales have declined. In a memo to employees, Ballmer said he would continue as one of Microsoft’s “largest owners.” Prior to today, Microsoft stock had gained 21% this year. Shares were up more than 7% after this morning’s opening bell. Here’s Microsoft’s official release:
REDMOND, Wash. — Aug. 23, 2013 — Microsoft Corp. today announced that Chief Executive Officer Steve Ballmer has decided to retire as CEO within the next 12 months, 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.
“There is never a perfect time for this type of transition, but now is the right time,” Ballmer said. “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.”
The Board of Directors has appointed a special committee to direct the process. This committee is chaired by John Thompson, the board’s lead independent director, and includes Chairman of the Board Bill Gates, Chairman of the Audit Committee Chuck Noski and Chairman of the Compensation Committee Steve Luczo. The special committee is working with Heidrick & Struggles International Inc., a leading executive recruiting firm, and will consider both external and internal candidates.
“The board is committed to the effective transformation of Microsoft to a successful devices and services company,” Thompson said. “As this work continues, we are focused on selecting a new CEO to work with the company’s senior leadership team to chart the company’s course and execute on it in a highly competitive industry.”
“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,” said Gates. “We’re fortunate to have Steve in his role until the new CEO assumes these duties.”
Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.