US software giant Microsoft CEO Steve Ballmer speaks to the press in Tokyo on May 23, 2013. Micrsoft announced plans to expand enterprise cloud service Windows Azure in Japan and set new data centers in Tokyo and Osaka. AFP PHOTO / GETTY IMAGES / Yoshikazu TSUNO
Microsoft says Steve Ballmer will retire as the company's CEO within 12 months, as the tech giant navigates a rapidly-changing computer market.
In a statement released Friday, Microsoft said Ballmer, 57, will stay on to help search for his successor.
"There is never a perfect time for this type of transition, but now is the right time," Ballmer said in the statement.
Shares of Microsoft surged 7% in early trading off the announcement.
Microsoft will appoint a special committee - which will include board chairman and founder Bill Gates - to search for Ballmer's replacement. "I'll work closely with the other members of the board to identify a great new CEO," said Gates.
Ballmer joined the Redmond, Wash., company in 1980 as its first business manager before becoming CEO in 2000. During that time, he oversaw several key initiatives including the launch of the Xbox video game console and Bing search engine, the $8.5 billion acquisition of Skype and several iterations of its Windows operating system.
Ballmer's eventual departure from the tech giant arrives during a significant market transition. With more consumers shifting from desktop and laptop computers to mobile devices, companies including Microsoft are scrambling to keep up.
In October, Microsoft will still start rolling out Windows 8.1, the update to its Windows operating system designed to work across traditional computers, tablets and smartphones. The company has also dipped into the tablet business with the launch of its Surface devices.
However, the tablets don't appear to be catching on with many consumers. Microsoft recently slashed prices on Surface tablets, forcing it to take a $900 million write down.
In an email sent to Microsoft employees, Ballmer expressed confidence in Microsoft's future.
"Microsoft has all its best days ahead," said Ballmer. "Know you are part of the best team in the industry and have the right technology assets. We cannot and will not miss a beat in these transitions. I am focused and driving hard and know I can count on all of you to do the same. Let's do ourselves proud."
In July, Ballmer announced a management overhaul as part of its efforts to speed the pace of innovation. It in effect jettisoned divisional heirarchy established under Gates to focus instead on collaboration around disciplines and engineering areas.