Ray Ozzie Steps Down As Microsoft Software Chief

Ray Ozzie is stepping down from his chief software architect position at Microsoft, but he'll apparently be staying on for an unspecified period of time to help revitalize the company's entertainment business.

In a Monday e-mail to Microsoft employees, Microsoft CEO Steve Ballmer announced the move and said Ozzie will remain with Microsoft to transition his teams and projects. Once this is finished, and before he retires from the company, Ozzie will shift his attentions to Microsoft's investments in the "broader area of entertainment," Ballmer said in the email.

"We have tremendous opportunities in the entertainment space overall, and I'm excited about what we can accomplish," Ballmer said in the email.

Ozzie, who came to Microsoft in 2005 as part of the software giant's purchase of his company Groove Networks, will continue reporting to Ballmer during the transition, but Microsoft isn't planning to replace him, Ballmer said in the e-mail.

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Ballmer credited Ozzie with his work in developing Windows Azure, the platform-as-a-service that forms the backbone of the software giant's cloud computing technology portfolio. Ozzie's 2005 Internet Services Disruption memo has helped shape Microsoft's cloud computing strategy, according to Ballmer, who described this as "full speed ahead in all aspects of our business."

Next: Ozzie's Role As Microsoft Cloud Visionary

"By conceiving, incubating and shepherding Windows Azure, Ray helped ensure we have a tremendously rich platform foundation that will enable app-level innovation across the company and by customers for years to come," Ballmer said in the email.

Speculation about Ozzie's future with Microsoft flared last December after the company shifted leadership of the Windows Azure development team from Ozzie to Bob Muglia, president of the Server And Tools division, and unveiled its new Server & Cloud Division (SCD).

Microsoft has seen a string of high profile executives leave the company this year, but Ozzie's departure is probably the most significant for a company that's so focused on cloud computing at the moment.

There's little doubt that Ozzie's departure will be portrayed as a blow for Microsoft's cloud computing fortunes, and psychologically, this may be true. However, Ballmer's e-mail included just the right amount of delicious ambiguity to raise the possibility that perhaps Ozzie merely wants to tackle another, even bigger challenge for Microsoft -- staying relevant with consumers.