Shares in Microsoft, criticised for its slow response to the booming market for mobile devices, leapt 9% on the news. Mr Ballmer, who last month unveiled a restructuring to address the criticism, said in a statement: "There is never a perfect time for this type of transition, but now is the right time. We need a CEO who will be here longer term for this new direction."
The world's biggest software company has created a special committee to find a replacement. This committee includes Microsoft founder Bill Gates. Mr Ballmer, 57, succeeded Mr Gates in 2000. The two men met in 1973 while studying at Harvard University, and Mr Ballmer joined the company in 1980.
Microsoft emerged as the undisputed leader in the technology sector, and became the world's largest company by market value. But the company had been criticised by investors recently for not reacting quickly enough to the way Apple and Google have led the way in mobile devices. Microsoft struggled as consumers began to shun desktops and laptops in favour of tablets and mobile devices.
While its Windows software is used on the vast majority of PCs, Microsoft made little impact in the fast-growing tablet and smartphone segments. Microsoft's transformation plan, announced last month, is trying to address that.
In a memo to staff last month, Mr Ballmer said that the changes meant the company was "rallying behind a single strategy as one company - not a collection of divisional strategies". The aim, he said, was to react faster to changes in the market.
Source: BBC News
