Microsoft has this morning announced that Steve Ballmer has decided to retire as CEO within the next 12 months, upon the completion of a process to choose his successor.

In the meantime, the Redmond firm says Ballmer will continue as CEO and will lead the company through the next steps of its transformation, focussing on the "One Microsoft" culture Ballmer recently created.

“There is never a perfect time for this type of transition, but now is the right time,” Ballmer said this morning.

“We have embarked on a new strategy with a new organisation and we have an amazing Senior Leadership Team.

"My original thoughts on timing would have had my retirement happen in the middle of our company’s transformation to a devices and services company.

"We need a CEO who will be here longer term for this new direction.”

The Board of Directors has appointed a special committee to direct the process, chaired by John Thompson, the board’s lead independent director. The panel also includes Chairman of the Board Bill Gates, Chairman of the Audit Committee Chuck Noski and Chairman of the Compensation Committee Steve Luczo.

The special committee is working with Heidrick & Struggles International Inc., a leading executive recruiting firm, and will consider both external and internal candidates.

“The board is committed to the effective transformation of Microsoft to a successful devices and services company,” Thompson said.

“As this work continues, we are focused on selecting a new CEO to work with the company’s senior leadership team to chart the company’s course and execute on it in a highly competitive industry.”

“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,” said Gates.

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