Update: Jeff Raikes to retire from Microsoft this year

Jeff Raikes, the president of Microsoft's Business Division, plans to retire in September, the company said on Thursday.

A Microsoft employee since 1981, Raikes oversees a broad stretch of the company's product line, including its Office, Dynamics, and Exchange software. Microsoft's Business Division generated about $16 billion in annual revenue last year, or slightly less than a third of the total.

"There is no overstating the incredible impact Jeff has had during his amazing career at Microsoft," CEO Steve Ballmer said in a statement.

Raikes will be replaced by Stephen Elop, formerly the COO at Juniper Networks. Elop also did a stint as president of worldwide field operations at Adobe Systems following its acquisition of Macromedia, where he served as president and CEO.

Elop will start at Microsoft at the end of this month and take over Raikes' portfolio gradually, starting with the company's Information Worker, Business Solutions, and Unified Communications businesses.

The news of his departure, which had not been expected, comes about one year after Jim Allchin, head of Microsoft's Windows division, retired. And later this year, Microsoft Chairman Bill Gates will retire from his position as Microsoft's chief software architect.

But at least one analyst doesn't see a troubling pattern of departures. The moves by Gates and Allchin were planned long in advance, and Allchin's departure coincided with the end of a big product cycle -- the release of Windows Vista last January.

Raikes' departure also comes not too long after the end of a major release cycle, with Office 2007 and Exchange Server 2007 released at the end of 2006.

"They had a big wave of releases at the end of 2006, and if they wanted to replace [Raikes] with someone of the caliber they got, then it may have taken this long to find someone," said Rob Helm, director of research with Directions on Microsoft in Kirkland, Washington.

"The stock price and the business are in a pretty solid state, so he's got nothing to be ashamed of as he walks out the door," he said. "It seems in many ways like an ideal time for him to go; otherwise, he may have had to wait another four years."

Microsoft didn't say why Raikes, 49, decided to retire. Helm declined to speculate, but noted that Raikes has been a Microsoft employee since the early days, which would have brought him considerable wealth. "Clearly he doesn't have to work, he can afford to do pretty much whatever he wants," he said.

With Raikes set to retire, Bob Muglia, senior vice president of Microsoft's Server and Tools business, will now report directly to Ballmer, the company said.

As well as Office and Exchange, Raikes is responsible for Microsoft's Sharepoint Server and SQL Server database, which are central products in its business strategy. SQL Server is due for an interim release soon, but the technical development of that product was being driven more by Muglia than by Raikes, Helm said.

Helm didn't expect any significant disruption to Microsoft's product development. "2001 and 2002 were much worse in terms of high-level departures," he said.

This story was updated on January 10, 2007