The search begins for a new CEO to lead Microsoft in its transformation to a device and services-focused company

Microsoft Corp. CEO Steve Ballmer announced today that he is ready to retire in the next 12 months once a suitable successor to the top post in the computer company is found.

“There is never a perfect time for this type of transition, but now is the right time, Ballmer said in statement released today. “…My original thoughts on timing would have had my retirement happen in the middle of our company transformation to a device and services company.”

Microsoft chairman Bill Gates is heading the succession planning committee.

“As member of the succession planning committee, I’ll work closely with the other members of the board to identify a great new CEO,” he said in a statement. “We’re fortunate to have Steve in his role until the new CEO assumes these duties.
 
During Ballmer’s watch the PC went from a “hobbyist plaything to mainstream workhorse” at home and in the workplace and Ballmer was instrumental in fundamentally “rewiring how people get work done,” said London, Ont.,-based industry analyst Carmi Levy.
 
In the long-term though, Levy foresees that a new leadership will “gradually influence the culture of the organization.”

Ballmer will continue as CEO and lead Microsoft through the next steps of its transformation to a device and services company.

At least one Canadian technology analyst said the controversial CEO could have stayed a bit longer.

“I think you could argue he could have hung in a bit longer,” said James Alexander, senior vice-president of Canadian IT research firm Info-Tech Research Group. “They are well positioned I think in terms of strategy of having a user experience across all device types and form factors.”

Another analyst described Ballmer’s planned retirement as “good news” for the software giant. 

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“Ballmer is part of the old guard,” David Senf, vice-president of the information solutions group at IDC Canada, said in describing Ballmer, who joined Microsoft in the 1980s and is actually employee number 30 of the company.
 
“Like the reorganization announced back in July, this announcement indicates the Microsoft board – including Bill Gates – wants to skate to where the puck will be, not where it is today,” he said. “They tried this with Ray Ozzie. But internal politics and other factors conspired against his efforts.”
 
Among those factors, Senf said, were “Google, Amazon, Apple and lengthy list of startups” that represented the shift of IT towards cloud and mobility.
 
News of Ballmer’s departure plans also comes at a time when Microsoft continues to struggle with getting its new touchy Windows 8 operating systems and tablet devices gain greater acceptance in the market place. The company’s Surface RT and Surface Pro tablets have been fighting a steep uphill battle against rivals such as Apple Inc.’s iPad, Samsung’s Galaxy Tab and other Android OS tablet devices.
 
Levy said that a change in the leadership of Microsoft will not impact costumers.
 
“In the near-term there likely won’t be any noticeable impact on consumer and enterprise customers,” he said. “Just as Apple continued to function consistently following the retirement of Steve Jobs, there’s no reason to expect Microsoft’s experience will be any different following Mr. Ballmer’s departure.
 
Today, Ballmer said Microsoft has an “amazing senior leadership team,” and the company will “need a CEO who will be there for the longer term of this new direction.”
 
In a blog Forrester Research analyst Ted Schadler said that under Ballmer, Microsoft made “massive inroads into enterprise server software and tools. But, he added, while it spent on consumer services and mobile it didn’t make much progress. Meanwhile cloud-based competitors like Google, Amazon and Salesforce have become enterprise suppliers.
 
The new CEO will have to face what Schadler called its “IBM or GE moment:” Keep the company as it is (as GE did), or split it up (as IBM did by selling its PC division to Lenovo).
 
Three forces will drive that decision, he wrote: Technology is increasingly not split into personal and business (think of smart phones); premise-based software is disappearing; and the move from desktop to doing work on mobile devices.
 
Microsoft  has appointed a special committee to direct the process of selecting a successor to Ballmer. The committee is chaired by John Thompson, the board’s lead independent director.

Other members of the committee are: Gates; Chuck Noski, chairman of Microsoft’s audit committee; and Steve Luczo, chairman of the compensation committee.

Recruitment firm Heidrick & Struggles International Inc., will work with the special committee in considering both external and internal candidates.

Thompson said the committee is concentrating its efforts in finding “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.”

While Ballmer has received much criticism in recent years for being slow to change, Alexander said it remains a formidable tech company.

“You have to say regardless of whether the criticism he receives for not growing the company or it getting stodgy, it’s still in business and has the largest footprint in the corporate world of any organization,” he said.

 
In terms of a possible internal successor, Alexander mentioned Kevin Turner, longtime chief operating officer of the firm, who has an excellent retail background from his previous position at Walmart.
 
“It’s that kind of background that would propel someone forward or bring fresh new energy and perspective,” he said.
 
It is likely Microsoft could go the other route and consider a candidate from the outside perhaps from Google or a competing competing company, Alexander said.
 
Senf said finding a successor to run Microsoft in the changing IT industry is a tall order but he doesn’t think Turner is a good choice.
 
“What Microsoft doesn’t need is a Jack Welch, Lou Gestner or even an insider such as Kevin Turner-style of CEO,” he said. “They’ll have a COO for those tasks. Visonary wanted. Someone like Ford’s CEO Alan Mulally would fit well.”
 
(With files from Jeff Jedras)
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