Steve Ballmer's promotion to Microsoft Corp. chief executive officer CEO) yesterday didn't come as a surprise to industry analysts, although the timing of the announcement raised a few eyebrows.

Ballmer will take over from Bill Gates as CEO while retaining his title of company president, Microsoft said yesterday. Gates, meanwhile, will continue as Microsoft chairman and take on a new role, that of chief software architect. The software giant also announced a new strategy aimed at providing an overarching vision for the company's products to reflect the ever-growing importance of the Internet.

Long-time coming "It was pretty much expected," said Tim Bajarin, president of market research company Creative Strategies, adding that Gates began stepping down from the day-to-day running of Microsoft a long time ago, even before he appointed Ballmer company president in July 1998.

"It's been on the cards for a while," agreed Larry Perlstein, research director, Research Advisory Services, with Gartner Group. "The antitrust case has eaten up an inordinate amount of Gates' time, taking him away from what he loves best - driving the technology direction of the company."

"Gates really felt he wanted to get back to his roots in software design and software strategy," Bajarin said.

Unified strategy wanting What Microsoft lacks at present is a comprehensive strategy for bringing all of its disparate software products together, Bajarin said. "If Microsoft wants to be around 10 years from now, it needs to put together a unified strategy for software and Bill realized that the only person who can do it is him. It's what Bill does best," he said.

Microsoft has tried in the past to articulate an underlying strategy for its entire product portfolio, but has had to make changes to its existing product set and to its company structure, Perlstein said. "They've not reached a stage where it's all synched up," he said, adding that Microsoft should be able to finally achieve its goal in the middle of this year once Windows 2000 and the software dependent on the new operating system have been launched.

"It'll all come together," Perlstein said, "though time will tell if it's really true or not."

Timing connected? Creative's Bajarin said that he thought the timing of yesterday's announcement had nothing to do with the ongoing US Department of Justice (DOJ) trial against Microsoft - the software giant is due to make its conclusions of law in the case tomorrow. Nor did he think it was connected to the $350 billion merger between America Online Inc. (AOL) and Time Warner Inc., which was announced on Monday. "This has been coming for ages, the timing is purely coincidental," Bajarin said.

However, Rob Enderle, a senior analyst at Giga Information Group, said that the Microsoft announcement was timed deliberately to give the software giant a chance to respond publicly to rumours that plans to break up the company are already being discussed by US government prosecutors in the antitrust trial.

Microsoft probably had planned to make yesterday's announcement later this year, but advanced the news in order to create a significant forum for Gates and Ballmer to make their pitches on the antitrust case, Enderle said.

Enderle added that today's announcement allows Microsoft to offset any suggestion that the tie-up between AOL and Time Warner might put the software giant out of business. "It gave Microsoft an opportunity to put the record straight," he said.

Net provider Recasting Microsoft is vital for the company's continued survival, according to Enderle. "The bottom line is that Microsoft has to become an Internet provider of technology. The company will look dramatically different over the next five years, and it has very fundamental and deep changes to address," he said.

Enderle also predicted that once Microsoft launches its Windows 2000 operating system next month, there will be "another wave of departures" from the company of high-level executives who feel that their work at the firm is now done.

"Once the company stabilizes again, Microsoft will completely re-architect its products and the way it sells them," moving away from its focus on selling shrinkwrapped software, Enderle said. "If it's possible to do (re-architecting the company), then Microsoft will do it. The question is whether it is possible," he added.

Bill's emotional side To Chris Le Tocq, a research director with Gartner Group, Ballmer's ascendancy to the CEO position also represents a change in Microsoft's approach to the ongoing antitrust case with the US DOJ.

"If Gates represents the emotional side of Microsoft, Ballmer - as far as its possible for Microsoft management - represents the rational side," he said, with Ballmer today talking about "clever ways" to reach a settlement with the US government.

"Steve's the right guy for the (CEO) job," Le Tocq said. "I do think Microsoft is a religion for Bill, while it's a job for Steve."

Microsoft's main business today is still centered on the PC and designing PC applications, Le Tocq said.

Other companies creating Web-based applications are not encumbered by the need to link to existing PC architecture in the way that Microsoft is, he added. "Today's announcement is the old Microsoft FUD (fear, uncertainty and doubt) and rests upon three legs - controlling the document interchange format, controlling the developers and controlling the platform," Le Tocq said.