Bill Gates' resignation as CEO of Microsoft and his replacement by Steve Ballmer, who was appointed president of the company in July 1998, was planned some months ago.

Mr Gates discussed his desire to play a different role with members of the Microsoft board, but the move effectively confirms what had already happened in practice so far as the day-to-day running of Microsoft was concerned.

Mr Gates remains as chairman and has the additional title of chief software architect.

He says that he wishes to get involved in the design of the next version of Windows, and said that "I might be threatening to write code.

That's something I haven't been able to do in three or four years." He may well take more time to oversee the activities of the Gates Foundation, and visit some countries that have received grants.

The announcement yesterday of Next Generation Windows Services will not be fleshed out until the Spring, when a conference will be held.

Timing excites

The interesting factor is therefore the timing, and whether there is a message that would give some clue as to Microsoft's current thinking about the antitrust case brought by the US Department of Justice and now in its closing stages in the US District Court in Washington DC.

Certainly Mr Gates did not distinguish himself in his videotaped deposition, extracts from which were played in court before a clearly sceptical Judge Jackson.

In 1994 during the negotiations that resulted in a consent decree, it emerged that Mr Gates frustrated efforts by Anne Bingaman, then assistant attorney general for antitrust, to negotiate a settlement.

It is not surprising that the tough but more pragmatic Mr Ballmer is now officially leading Microsoft. His appointment yesterday gave him the opportunity to comment on leaks from the mediation talks with Judge Posner currently underway in Chicago, which are supposed to be confidential.

Reports in USA Today and the Washington Post have suggested that the DoJ wants Microsoft to be split into two or three parts in some unspecified way.

The DoJ officially denied the accuracy of the reports, saying that in any remedy there would need to be competition "promoting innovations and consumer choice".

Mr Ballmer said: "I believe the leaks are deliberate [by the DoJ and/or the plaintiff states]. I don't think there's any doubt about that", in the hope of pressuring Microsoft to settle quickly.

Clinton comments

President Clinton became involved when he was asked about the events. He said: "I think it's a very interesting move by him. Ballmer's obviously a very able man and Gates is a genius with technology".

He applauded the Gates' charitable contributions, and then went on to make an extraordinary statement about the trial: "The record has been made. The judge's opinion is there and they have to argue about the remedy, which as everyone knows in an antitrust case is completely different from a finding whether somebody violated laws or not.

I hope they'll do what's best for the American economy and American consumers, in the short run and over the long run."

The president's desire to protect the American economy, without any mention of appropriate measures to restore competition to the software industry and despite a federal judge having found that Microsoft had been guilty of monopolisation, was unprecedented.

Caldera settlement hopes

Although the settling of the Caldera case by Microsoft earlier this week gave some hope that Microsoft might wish to bring about a settlement of the trial, Microsoft is resolutely opposed to any splitting of the company.

Time is now running out, since after the filing of further briefs with Judge Jackson in the next few weeks, there will be an oral hearing on 22 February concerning the proposed legal findings of fact, after which the judge will deliver his legal conclusion, possibly in late March or April.

Assuming there is a legal case to answer, and there is no little doubt about this, possible remedies will then be examined before the judge issues any Order. It is widely expected that Microsoft would appeal.

In the past, Microsoft has always indulged in legal brinkmanship, so it may well be that Mr Ballmer would prefer to wait as long as possible before making any pragmatic decision to negotiate rather than suffer a judicially ordered break-up of the company.

Mr Ballmer made it clear that in the coming months, Microsoft would be targeting Sun, IBM, Linux and AOL, suggesting that Microsoft's competitive spirit was far from dimmed by the stepping down of Bill Gates.