Gates said his "commitment to working full-time" for the company remains "100 percent," but that it was time for the management structure to evolve.
Calling the move "a very exciting evolution for me," Gates cited his 25 years as CEO of the company he co-founded in January 1975 as a reason for him to take what he called "the next step."
Gates said his new role as chief software architect will be to focus on future technologies, helping the company make the right strategic bets for the future. Although he enjoyed running the day-to-day operations, Gates said, this move will get him back to the role he truly cherishes.
Ballmer said Microsoft will continue major product and services initiatives now underway.
"I'm just very appreciative for the opportunity," he said.
Ballmer: Breakup 'reckless'
Responding to news accounts that the U.S. Department of Justice will ask for Microsoft to be broken up as an antitrust remedy, new CEO Ballmer said such an action "would be reckless beyond belief."
Ballmer replaced Gates as president of the company in July 1998.
At the time, Gates said he wanted to spend more time focusing on developing new ideas and strategies and allow Ballmer to focus more on the day-to-day running of the company.
More details to follow.
