Bill Gates' successor at Microsoft to retire

SEATTLE (Reuters) - Microsoft Corp’s software chief Ray Ozzie, who took over the role from Bill Gates and pushed the company firmly in the direction of the Internet, will take an entertainment job at the company and then retire.

Chief Software Architect at Microsoft Ray Ozzie speaks at the 2008 Microsoft Professional Developers Conference in Los Angeles October 27, 2008. REUTERS/Fred Prouser

The move signals a new phase in Microsoft’s move into cloud computing, which Ozzie championed, and a new focus on entertainment at the world’s largest software company, where it has lost ground to Apple Inc and Google Inc.

It also cements control of the company’s direction under Chief Executive Steve Ballmer.

Ozzie, 54, who created the groundbreaking Lotus Notes email system early in his career, took on the role of overseeing Microsoft’s software direction in 2006. Gates retired from day-to-day work at the company in 2008.

He had made a splash at the company the year before, shortly after he joined, with his now-famous “Internet Services Disruption” memo, which pushed Microsoft toward the Internet and cloud computing, the provision of services and data over the Internet.

Some saw that as a challenge to Microsoft’s core business of getting software installed on as many computers as possible, but the company now says it is “all in” for cloud computing, although it is still far from certain that Microsoft will ultimately benefit from the shift.

Ozzie’s key project, the “Azure” platform for developing cloud-based applications, debuted this year to moderate success. The company is extending beyond Azure, trying to grab a greater share of customers’ tech spending by offering to handle their servers, data storage and other computing needs.

Ozzie cut a slightly detached figure at Microsoft, and never fully established himself as a force at the company’s campus near Seattle, preferring to spend half his time at his home in Massachusetts.

“I don’t think this means much for the future of software development at Microsoft because he didn’t leave a stamp,” said Fort Pitt Capital Group analyst Kim Caughey Forrest.

Microsoft shares fell 2.2 percent to $25.25 in after-hours trading.

According to a memo sent by Ballmer on Monday, Ozzie will focus on entertainment efforts at the company and retire after an unspecified time. The company said it would not refill the chief software architect role.

Ozzie’s move could revitalize entertainment efforts at Microsoft. Its entertainment and devices unit, which includes the Xbox game system and the new Windows 7 phones, has been struggling to win consumers in areas like phones, TV software and tablets, where Apple and Google are charging ahead.

“When you look at consumer market, that is where Microsoft is lagging now,” said Gleacher & Co analyst Yun Kim. “That’s where they can definitely use some outside help in terms of re-energizing innovations and the whole growth driver around that side of the business.”

(Additional reporting by Liana Baker in New York and Alexei Oreskovic in San Francisco)

Reporting by Bill Rigby. Editing by Robert MacMillan