Gates's planned departure from daily executive duties is "going to be a notable milestone in the coming year for Microsoft," said Dwight Davis, an analyst with the Ovum research firm.
Gates, who is shifting virtually full-time to his philanthropic endeavors, will remain as Microsoft chairman and is expected to work on selected projects.
Another challenge for Microsoft will be trying to gain traction with its $6 billion acquisition of online ad company aQuantive, the Seattle Post-Intelligencer reported Monday.
Even though it has made progress recently through ad deals with Viacom and Facebook, Microsoft's overall online unit remains unprofitable because of money spent elsewhere.
Partners and rivals will be watching Microsoft to see how far it moves from its traditional PC-based software to more Internet-based offerings that are funded by advertising or subscriptions instead of licensing fees.
And a major upgrade to its Vista operating system as well as the next OS generation -- internally called Windows 7 due in 2010 -- will be watched as well.
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