It's Been a Good Existence

"I've decided that two years from today, I will reorganize my personal priorities," Gates said during a news conference, adding,"I have one of the best jobs in the world."

"I believe with great wealth comes great responsibility - the responsibility to give back to society and make sure those resources are given back in the best possible way, to those in need," he said. Gates added, "It's not a retirement, it's a reordering of my priorities."

(Special Report: Goodbye, Mr. Gates, stories from CNNMoney,com, FORTUNE, FORTUNE Small Business, Business 2.0)

The company's chief technical officer, Ray Ozzie, will immediately assume the title of chief software architect and begin working side by side with Gates on all technical architecture and product oversight responsibilities. Ozzie became chief technical officer of Microsoft in April 2005, when Microsoft bought Groove Networks, the company Ozzie founded.

Craig Mundie, the current chief technical officer, will take the new role of chief research and strategy officer, also effective immediately. Mundie will work closely with Gates to assume his responsibility for the company's research and incubation efforts, Microsoft said. Mundie also will partner with the company's general counsel Brad Smith to guide Microsoft's intellectual property and technology policy efforts. Mundie, 56, joined Microsoft in 1992.

Ozzie and Mundie will continue to report to Gates until the transition is complete, when they will begin reporting to Ballmer.

Shares of Microsoft fell slightly, by about 0.4 percent, in after-hours trading.

"They really did give a very long lead time in terms of prepping investors for his departure, and it's only a partial departure at that," said Michael Cohen, director of research at Pacific American Securities. "I think that was good in terms of muting the effect on the stock."