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Microsoft Chief Software Architect Ozzie to Step Down

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Oct. 18 (Bloomberg) -- Microsoft Corp. Chief Software Architect Ray Ozzie, an executive once considered an heir to co-founder Bill Gates, will step down, becoming the third senior executive to announce his resignation in less than five months.

Ozzie, who joined the company in 2005, won’t be replaced because the company has enough other leaders in place, Chief Executive Officer Steve Ballmer said today in an e-mail on Microsoft’s website. Ozzie, 54, will be “on board” for a while before departing, Ballmer said.

Ozzie’s departure follows the May resignation of entertainment chief Robbie Bach and the unexpected decision last month by Office division head Stephen Elop to become CEO of Nokia Oyj. Ballmer needs to demonstrate that he can maintain a deep bench of potential successors, said Michael Gartenberg, an analyst at Gartner Inc.

“When a manager fires a person or a person departs it’s one thing, but when multiple people depart from a given manager, at a certain point it raises questions on the manager,” Gartenberg said. “Once again, there’s an empty seat at Ballmer’s table.”

Microsoft fell 2.2 percent to $25.25 in late trading after the announcement. The shares had risen 28 cents to $25.82 today on the Nasdaq Stock Market.

Ozzie took the lead in pushing Microsoft into Internet-based software. In a 2005 memo, he told executives the company needs to respond to the shift or “our business as we know it is at risk.”

Less Visible

When Gates announced in 2006 that he would step down from his day-to-day role, Ozzie was one of two executives tapped to chart the course of the world’s largest software maker. Yet Ozzie has been less visible recently and his departure wasn’t a big surprise, said David Smith, also an analyst at Gartner.

“I don’t think it’s going to have a huge impact,” Smith said. “He was trying to fill some pretty big shoes -- you don’t just walk in and become the next Bill Gates.”

Ozzie didn’t speak to analysts and investors at the company’s annual analyst meeting in July.

Plans for many of Microsoft’s products are increasingly laid by individual business groups, and executives such as Steve Sinofsky, president of the Windows division.

Ozzie, who had done much of his work in smaller companies, may have found it difficult to exert influence at Microsoft, said Paul Saffo, a managing director at Discern Inc., a San Francisco-based investment research firm.

Surprise ‘Mismatch’

The pairing was a “cultural mismatch,” Saffo said, because Ozzie was used to trying out ideas quickly and cutting his losses if it didn’t work, a tall order at Microsoft.

“I was surprised he went to Microsoft,” said Saffo, who has known Ozzie since the 1980s. “I was surprised he stayed as a long as he did. I’m not surprised that eventually there was organ rejection here.”

Saffo said Ozzie leaves behind important accomplishments, including getting the company in the so-called cloud business.

In 2008, Ozzie unveiled Microsoft’s Azure cloud software for storing and running customers’ programs in Microsoft’s own data centers. With the work on Azure shifted to Microsoft’s server and tools business, under President Bob Muglia, Ozzie may have found his work at Microsoft was done.

“What else is he going to do?” said Dan Warmenhoven, chairman of NetApp Inc. “He’s a very unique personality. He’s smart as hell, but he’s not really a businessman. He’s a technologist. He’s probably looking for the next big thing, and didn’t see it there.”

To contact the reporter on this story: Dina Bass in Seattle at

To contact the editor responsible for this story: Tom Giles at

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