Ballmer earlier this year announced a major strategic reorientation for Microsoft (Photo: Microsoft)

Microsoft said its CEO, Steve Ballmer, plans to retire within 12 months.

The US software maker said its board of directors has started the search for a successor. Ballmer will stay on as CEO until that process has been completed.

"There is never a perfect time for this type of transition, but now is the right time," Ballmer said in a press statement. Microsoft's transformation into a "devices and services company" requires a CEO who "will be here longer term for this new direction," he said.

In July, Ballmer announced that Microsoft was embarking on a new strategic course that would adapt the company's product offering to the demands of a new "always-on" era. In a statement, he said: "Going forward, our strategy will focus on creating a family of devices and services for individuals and businesses that empower people around the globe at home, at work and on the go, for the activities they value most."

Microsoft's board has formed a committee to deal with the CEO succession. Bill Gates, founder of Microsoft and chairman of its board, is part of the group. "As a member of the succession planning committee, I’ll work closely with the other members of the board to identify a great new CEO," he said.

Ballmer joined Microsoft in 1980 and was the company's first business manager. He served as senior vice president of sales and support, senior vice president of systems software and vice president of marketing before taking over from Gates as CEO in 2000.

In an internal email to Microsoft employees, Ballmer noted this week that, since he joined the company in 1980, its sales had grown to 78 billion dlrs from 7.5 million dlrs and staff increased to almost 100,000 from slightly more than 30. "Microsoft has all its best days ahead," he said, adding that the company has the "right technology assets" to continue its growth.

Microsoft last month reported a 3 pc rise in global revenue to 19.2 billion dlrs for its fiscal fourth quarter, which ended June 31. Operating income dropped 11 pc to 6.2 billion dlrs and net earnings declined 19 pc to 59 cents a share.