The funny farewell: Bono, Clooney and Hillary say goodbye to Bill

The introduction of three letters on to Bill Gates’s executive office plaque yesterday signalled a new era for Microsoft, the software giant that has brought about the biggest change in global business culture since the invention of the telephone or the internal combustion engine.

Yesterday Mr Gates stepped down from the day-to-day running of the company he helped to found in 1975 to become nonexecutive chairman.

The move will allow him to concentrate on running the Bill and Melinda Gates Foundation and anoint Steve Ballmer, already chief executive, as the undisputed boss.

For a man known as being socially awkward, his goodbye was unusually emotional. In a tearful farewell, Mr Gates said: “There won’t be a day in my life when I won’t be thinking about Microsoft, the great things that we’re doing and wanting to help.”

But Mr Gates, 52, hands over the keys of the Seattle-based business with an uncertain future. While Microsoft has a highly lucrative global dominance in office software applications and web processing programs, the company is losing out in the fight to win its share of internet advertising.

Ranking behind Google and Yahoo!, Microsoft is desperate to secure a bigger chunk of the internet advertising market, worth $40 billion (£20 billion) a year and which is set to double by 2010.

Within the past month Microsoft has emerged bloodied from an 18-month fight to acquire Yahoo!, the internet search engine, that would have helped it to secure a stronger second slot. The $47 billion approach to buy Yahoo! was led by Mr Ballmer, but it was made with the guidance of Mr Gates. Yahoo! wriggled away in May.

Mr Gates signalled his intention to step down two years ago, but Wall Street has struggled since for guidance on the strategy of Microsoft and the way that it would be run once its co-founder stepped aside. Last month, at a meeting of the group’s chief executive officers, Mr Gates outlined how Microsoft hoped to translate the work of one man into a series of business units run by a group of executives.

He said: “We’ve created this thing we called quests, where we divided our types of customers down, and we got the best thinkers on these things, the practical people who are with the customers, the engineers who write the code and the researchers who may be more unbound in terms of their time frame and imagination, and put them together.”

Analysts were confused by the plans. Mr Gates, however, refused to elucidate. According to one report, an analyst briefed under a nondisclosure agreement left the building baffled.

Paul Degroot, an analyst for Directions, an independent technology consultancy, said that Microsoft was “basically replacing just one man with a collection of primarily technical people, engineers and product groups”. This may be no bad thing. Microsoft has tried to catch up with the rest of the music player market and the latest version of its Windows Vista operating system is widely seen as a disappointment.

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