The software vendor announced Gates' plans late Thursday after the close of financial markets in the U.S.

Microsoft also announced that Chief Technical Officer Ray Ozzie will immediately assume the title of chief software architect and begin working with Gates on all technical architecture and product-oversight responsibilities "to ensure a smooth transition."

Craig Mundie, the company's chief technical officer for advanced strategies and policy, will take the new title of chief research and strategy officer and will work with Gates to assume responsibility for the company's research efforts. Mundie also will be working with general counsel Brad Smith on Microsoft's intellectual property and technology policy efforts.

"I am very lucky to have two passions that I feel are so important and so challenging," Gates, 50, said during a news conference called to discuss the transition plan. "Microsoft is well positioned for success in the years ahead. We have a clear vision of how we will meet new challenges, [and] we continue to generate almost a billion dollars of profit every month."

He went on to downplay his own role at the company, though he telegraphed plans to remain as chairman for the foreseeable future.