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Monday, October 18, 2010, 10:35 pm PT (01:35 am ET)

Microsoft software chief resigns as Windows maker struggles in mobile

Ray Ozzie, the Microsoft executive who replaced Bill Gates as Chief Software Architect, has stepped down from his role, as the company fights to regain lost market share in the mobile space.

Microsoft Chief Executive Steve Ballmer announced Monday that Ozzie will not need to be replaced, Reuters reports.

"We have a strong planning process, strong technical leaders in each business group and strong innovation heading to the market," Ballmer told employees in a memo.

Ozzie, who was famous for his pioneering work on Lotus Notes, became Chief Software Architect in 2006 after Gates left the position to focus on his non-profit foundation. During his tenure, Ozzie spearheaded several initiatives in cloud computing, such as the "Azure" platform, and internet services.

Some analysts questioned the legacy that he will leave behind. "I don't think this means much for the future of software development at Microsoft because he didn't leave a stamp," said Fort Pitt Capital Group analyst Kim Caughey Forrest.

Others took the news as further evidence of Microsoft's post-Gates struggles. "Ozzie leaving highlights that Microsoft has been kind of lost in the woods ever since Bill Gates left," said Morningstar analyst Toan Tran. "They let Google solve search, they let Apple figure out smartphones, and Apple is in the process of figuring out non-Windows PC devices with the iPad."

A recent filing with the SEC revealed the Microsoft Board's dissatisfaction with the company's performance in the mobile and tablet space. In Ballmer's annual performance review, he was called out for "the unsuccessful launch of the Kin phone; loss of market share in the company's mobile phone business; and the need for the company to pursue innovations to take advantage of new form factors." In particular, the high-profile Kin smartphone project, which was killed after just 48 days on the market, has been viewed as a significant failure.

Microsoft finds itself fighting an uphill battle against its rivals. Apple revealed Monday that it had sold a record 14.1 million iPhones and 4.19 million iPads in the September quarter. Google announced last week that it is receiving $1 billion in annual mobile revenue.

On Oct. 11, the Redmond, Wash., software giant unveiled its answer to the iPhone and Android in the form of its Windows Phone 7 mobile operating system. Reaction to the launch was muted, however, with several analysts predicting disappointing sales of the devices.

Ozzie's resignation comes on the heels of Microsoft's former head of the Business Division Stephen Elop. In September, Nokia announced that Elop would replace Olli-Pekka Kallasvuo as CEO. Several other prominent Microsoft executives have also left the company after Gates, including Chief Financial Officer Chris Liddell and phones and games chief Robbie Bach, the report noted.

According to Ballmer, Ozzie will focus on the company's entertainment efforts during the transition, then retire. People familiar with the matter told Reuters that Ozzie's retirement would come in "a matter of months."