Details of Ballmer’s retirement send Microsoft’s shares higher

Ballmer, who is leading an overhaul of the group into a devices and services company, said: “There is never a perfect time for this type of transition, but now is the right time.

“We need a chief executive who will be here longer-term for this new direction.”

The 57-year-old met Microsoft founder Bill Gates at Harvard University in 1973 and joined the group in 1980. He took over the reins from Gates in 2000.

Ballmer will remain with the group until a successor has been hired, and Gates is on a committee that has been formed to find the company’s next leader.

Gates said: “As a member of the succession planning committee, I’ll work closely with the other members of the board to identify a great new chief executive.

“We’re fortunate to have Steve in his role until the new chief executive assumes these duties.”

US head-hunting firm Heidrick & Struggles International has also been taken on board to help with the search.

Microsoft unveiled transformation plans last month to address concerns that it has not moved fast enough into mobile devices – an area dominated by the likes of Apple and Google.

Ballmer was Microsoft’s first business manager and has held roles at the group including senior vice president of sales and support, senior vice president of systems software and vice president of marketing.

While the group has been criticised recently, Microsoft has more than tripled revenue and doubled profits under his leadership.

But Zeus Kerravala, an analyst at ZK Research, said: “Ballmer’s strength is traditional PC computing. He was a great guy for his era but times have changed and a new leadership is needed.”

There are no obvious candidates to succeed Ballmer at the company that has only had two chief executives in its 38-year history.

Shares were higher in early US trading after his departure was announced.