Ozzie's Famous Internet Services Disruption Memo
SEATTLE, Oct 18 (Reuters) - The Microsoft Corp (NASDAQ:MSFT) executive who took over the role of chief software architect from Bill Gates is to step down, following a tenure in which the Windows-maker lost ground to Google and Apple.
Chief Executive Steve Ballmer said Ray Ozzie would not be replaced, raising questions about the leadership and direction of the world's largest software company after a string of high-profile departures.
Ozzie, who spearheaded Microsoft's move towards providing software and computing power over the Internet -- known as "cloud computing" -- had achieved what he set out to do, one person close to the executive said, although others questioned whether he had had ever had much impact.
"Ozzie leaving highlights that Microsoft has been kind of lost in the woods ever since Bill Gates left," said Toan Tran, an analyst at Morningstar. "They let Google solve search, they let Apple figure out smartphones, and Apple is in the process of figuring out non-Windows PC devices with the iPad."
He is the latest in a line of Microsoft executives to exit the company in the wake of Gates' retirement from day-to-day work at the company in 2008, following platforms and services chief Kevin Johnson, Chief Financial Officer Chris Liddell, phones and games chief Robbie Bach and Office unit head Stephen Elop.
It cements control of the company's direction under Ballmer, who said he did not need to replace Ozzie.
"We have a strong planning process, strong technical leaders in each business group and strong innovation heading to the market," said Ballmer in a memo to employees, which Microsoft posted on its website.
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. His role became more visible after Gates's retirement.
He had made a splash at the company in 2005, shortly after he joined, with his now-famous "Internet Services Disruption" memo, which pushed Microsoft toward the Internet and cloud computing.
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 realize the change of business model or benefit from it.
Ozzie's key project, the "Azure" platform for developing cloud-based applications, debuted this year to moderate success, and is now part of another unit, Microsoft's Server and Tools division.
The company is now 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 $25.24 in after-hours trading.
The move signals a new focus on entertainment at the world's largest software company, where it has lost ground to Apple Inc (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOG) recently.
According to a memo sent by Ballmer on Monday, Ozzie will focus on entertainment efforts at the company and retire after an unspecified time, which people familiar with the matter said would be a matter of months.
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, Bernard Orr)