Bill Gates's decision to leave his full-time role at Microsoft ends a controversial career that shaped the first half-century of the information age and turned him into the world's richest man.
Mr Gates, a Harvard drop-out who founded Microsoft along with Paul Allen more than 30 years ago, said he would switch his attention instead to philanthropy, continuing the work on global health and education that has come to absorb his time.
The Microsoft chairman will hand over his responsibility for its software strategy immediately and reduce his involvement in the company progressively during the two-year transition period. He will give up all day-to-day activities by July 2008.
Mr Gates said he hoped to stay as chairman of what is the world's biggest software company "for the rest of my life", and that the directors had supported this idea. "I don't see a time in the future when I won't be the chairman of the company," he said.
Meanwhile, the Reuters news agency was reporting last night that Microsoft was developing a music and video device to compete with Apple's iPod and creating its own music service to rival Apple's iTunes.
Robbie Bach, a rising star at Microsoft who headed development of the Xbox videogame business, is overseeing the project, one source said.
Mr Gates, who has long said that he intended to donate the majority of his wealth to charity, said he planned eventually to devote most of his time to the work of the Bill & Melinda Gates Foundation, which he set up with his wife to tackle health and education issues, particularly in the emerging world. The world's richest charitable foundation, it has assets of $29.1 billion (€23 billion).
Steve Ballmer, Microsoft's chief executive, said Mr Gates was "now headed, in my opinion, to become the greatest philanthropist of all time".
The reshuffle at Microsoft will catapult an outsider into the top technical job.
Ray Ozzie, who joined Microsoft last year after the company bought his small software concern, Groove, will take on the title of chief software architect immediately.
Mr Ozzie has already been instrumental in spearheading a change in technical direction at Microsoft as it tries to adjust to the internet challenge represented by Google.
Mr Gates, whose 9.55 per cent stake in Microsoft is worth $22.5 billion, said he had "no plans" at present to reduce his holding.
Mr Gates might be shifting full-time from software to philanthropy over the next two years but he has been laying the financial and philosophical foundations for his future work over the past decade.
