Unexpected Gates move follows torrid Microsoft antitrust trial

Brilliant, hard-headed and pugnacious - and the world's richest man - Bill Gates may not be everyone's favourite industry leader, but few will dispute the sheer power he has wielded as chief executive of one of the world's most powerful companies.

Thus, his unexpected decision to hand over his chief executive role to Microsoft president, Mr Steve Ballmer, will rattle the industry and the business world in general. Few companies in history have been so closely associated with the personality of their chief executive, and Microsoft without Mr Gates as leader is hard to imagine. The move signifies a possible change in direction.

Microsoft is also entering the endgame of the lengthy antitrust suit brought against it by the US Justice Department. Amidst rumours this week that the Department would insist on a break-up of the company, Microsoft may feel that the changeover will lower the heat and allow for a more amicable solution. So, Mr Gates's departure as CEO could constitute a last-ditch tactical manoeuvre to preserve the company intact - at an almost unthinkable cost.

Mr Gates's gormless appearance belies consummate and ruthless business skills. Since the early 1990s, he has been virtually unstoppable, as has the rise and rise of Microsoft, which makes the products that dominate the home and business technology market. Mr Gates more than any other has accurately predicted movements and trends in the market. Only rarely has he misread them - most notably by underestimating the importance of the Internet - but even then he can, with breathtaking swiftness, reverse direction and elevate Microsoft into a position where it sets standards for a sector it formerly neglected.

No figure in the technology industry has come close to Mr Gates in influence and, as the US Justice Department has alleged in its current antitrust case, the ability to sometimes forcibly dictate the direction of the computing market.

Mr Gates has shaped an entire industry; in the process, he also became technology's first true celebrity - his spectacled face with its disheveled haircut is more recognisable globally than those of many major Hollywood stars. While Mr Gates remains as chairman and takes on the newly created role of chief software architect, the focus now will be on Mr Ballmer as Microsoft faces industry challenges and possible dismemberment.

Even without the antitrust suit to contend with, the company was at a crossroads. After more or less setting the parameters of the computing world, Microsoft is threatened by the medium it once ignored, the Internet. The Web could make many of the products in the Microsoft stable obsolete, even the ubiquitous Windows operating system that controls the basic operations of nearly everyone's computer.

Microsoft also has had little success in its attempts to become a media company. This week's colossal merger between America Online and Time Warner will create a formidable rival and points towards a likely future of further consolidation and bigger foes.

Finally, the antitrust suit has yet to be decided. Mr Ballmer indicated yesterday that he firmly opposed breaking up the company, but he may ultimately have no choice but to do just that. Mr Gates may then step back in as chief executive in one of the so-called "Baby Bills" - the spin-off companies. Few expect him to look on from a distance as the battle for his company unfolds.