Microsoft founder Bill Gates will step back from his day-today role at the world's biggest software maker over the next two years to concentrate on his charity foundation.
His decision to step down immediately as chief software architect and to relinquish all managerial roles in July 2008 comes at a time when Microsoft, whose Windows operating system runs an estimated 90 percent of the world's personal computers, is struggling to find new sources of growth.
Mr Gates, 50, passed the technical mantle to Ray Ozzie, who joined Microsoft last year and is at the heart of Microsoft's push to maintain its dominance by transforming software into services that generate an ongoing stream of revenue instead of just a one-time sale.
By July 2008, Mr Gates said, he will be working full-time for the Bill and Melinda Gates Foundation - which he has funded with his software billions to promote health and education projects around the world - but will still be working "part-time at Microsoft."
"Obviously, this decision was a very hard one for me to make," Gates told a news conference. "The change we're seeing today is not a retirement, it's a reordering of my priorities."
Few expected the news would affect operations at Microsoft which employs more than 60,000 people worldwide. Gates began taking less of a role when he handed the chief executive reins to long-time deputy Steve Ballmer in January 2000.
"Bill Gates may step away from day-to-day responsibility but he will never, ever step away from Microsoft," said Anthony Sabino, professor of business at St. John's University.
Shares in Microsoft rose 0.9 percent to close at $22.07 on the Nasdaq, and fell 9 cents in extended trading on the Inet electronic brokerage after Gates' announcement.
Microsoft stock, whose stratospheric rise during the 1990s inspired a generation of tech entrepreneurs, has fallen 13 per cent over the past year as investors question its ability to find new growth markets.
Microsoft has been trying to respond to threats from companies such as Internet search leader Google
and Apple Computer, which built a lucrative business around its iPod digital music player.
The company has also stumbled in releasing the next version of Windows, delaying its shipping date several times and cutting out some highly anticipated features.
Its MSN network of online services has struggled to gain traction against Google and Yahoo Inc., and it has spent billions of dollars trying to unseat Sony Corp. in the video-game console market.