Steve Ballmer announced Friday his plan to retire as CEO of Microsoft, a position he has held since it was vacated by Bill Gates in January 2000, within the next year after a successor is chosen.
"There is never a perfect time for this type of transition, but now is the right time," said Ballmer, 57, in a memo to all Microsoft employees.
"My original thoughts on timing would have had my retirement happen in the middle of our transformation to a devices and services company focused on empowering customers in the activities they value most. We need a CEO who will be here longer term for this new direction," he said.
According to a Microsoft news release, the board of directors has appointed a search committee chaired by board president John Thompson to work with recruiting firm Heidrick & Struggles International Inc. to find Ballmer's successor. They will consider internal and external candidates.
"The board is committed to the effective transformation of Microsoft to a successful devices and services company," said Thompson in the release. "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."
Microsoft's shares jumped 8.5 percent from Thursday's $32.39 closing as a result of Ballmer's announcement. Shares were hovering around $34 at 1 p.m. Friday.
In June 1980, Ballmer became Microsoft's 30th employee, and has been a part of the company as it grew from a budding startup to a tech giant worth $78 billion.
As CEO, Ballmer oversaw a number of Microsoft's biggest moves in the tech industry, including the creation of its Xbox division, the launch of its most successful operating system, Windows XP, the acquisition of Skype and, most recently, the introduction of the Surface tablet.
Since Ballmer took the reins of Microsoft at the height of the dot com bubble in January 2000, shareholders have seen their total returns drop nearly 20 percent, while the stock price dropped 36 percent, reported Forbes.
Tech analyst Jeff Kagan told U.S. News that Ballmer's announcement is the result of a stark change in the tech marketplace.
"The world changes. The industry changes. Microsoft was successful for years," Kagan said. "It's just that in the last several years, the industry is changing dramatically. New leaders are emerging. It means that the existing leadership needs change, and they haven't done a good job in the last few years. No one can continue to lead a company for decades successfully."
The announcement comes in the wake of poor sales of Microsoft's most recent operating system, Windows 8. Ballmer said at an event in 2008 that he planned to preside over Microsoft for at least another decade, "until my last kid goes away to college."
Forrester Research Analyst Frank Gillett told Mashable that a short list of internal candidates included Qi Lu, Kirill Tatarinov and Eric Rudder, executive vice presidents of Microsoft's applications and services, business solutions and advanced strategy, and research divisions, respectively.
Obvious external candidates would come from competitors such as Apple, Amazon and Google, according to Gillett.