NEW YORK (CNNMoney.com) - Microsoft announced Thursday that chairman and co-founder Bill Gates will transition out of a day-to-day role at the company, effective July 2008, to spend more time working on his charitable foundation.

Gates will then work part-time at Microsoft (up $0.19 to $22.07, Charts) as chairman and technical adviser and will work full time for the Bill and Melinda Gates Foundation, the organization he founded with his wife, which focuses on global health and education.

Microsoft Chairman Bill Gates announcing Thursday that he is stepping down from his day-to-day role with the company by July 2008.

"I've decided that two years from today, I will reorganize my personal priorities," Gates said during a news conference, adding,"I have one of the best jobs in the world."

"I believe with great wealth comes great responsibility - the responsibility to give back to society and make sure those resources are given back in the best possible way, to those in need," he said. Gates added, "It's not a retirement, it's a reordering of my priorities."

(Special Report: Goodbye, Mr. Gates, stories from CNNMoney,com, FORTUNE, FORTUNE Small Business, Business 2.0)

The company's chief technical officer, Ray Ozzie, will immediately assume the title of chief software architect and begin working side by side with Gates on all technical architecture and product oversight responsibilities. Ozzie became chief technical officer of Microsoft in April 2005, when Microsoft bought Groove Networks, the company Ozzie founded.

Craig Mundie, the current chief technical officer, will take the new role of chief research and strategy officer, also effective immediately. Mundie will work closely with Gates to assume his responsibility for the company's research and incubation efforts, Microsoft said. Mundie also will partner with the company's general counsel Brad Smith to guide Microsoft's intellectual property and technology policy efforts. Mundie, 56, joined Microsoft in 1992.

Ozzie and Mundie will continue to report to Gates until the transition is complete, when they will begin reporting to Ballmer.

Shares of Microsoft fell slightly, by about 0.4 percent, in after-hours trading.

"They really did give a very long lead time in terms of prepping investors for his departure, and it's only a partial departure at that," said Michael Cohen, director of research at Pacific American Securities. "I think that was good in terms of muting the effect on the stock."

"It's been my privilege to work shoulder to shoulder with a true visionary... who has now headed, in my opinion, one of the greatest philanthropies of all time," said Microsoft chief executive Steve Ballmer during the conference.

Gates co-founded Microsoft, which makes the ubiquitous Windows operating system, with Paul Allen in 1975, and took the company public in 1986. He remained CEO of the company until 2000, when Ballmer took the reins.

That year, Gates formed his charitable foundation, which now has $29.1 billion in assets. For their work with the foundation, Gates and his wife were chosen, along with rock singer Bono, as one of Time Magazine's Persons of the Year in 2005.

Gates himself is ranked as the world's richest man by Forbes magazine, which estimated his net worth at $50 billion in its 2006 ranking. That was up an estimated $46.5 billion net worth a year earlier. He owned just over 1 billion shares of Microsoft, as of Sept. 9, 2005, according to the company's most recent filing detailing those ownerships. That amounts to 9.6 percent of shares outstanding.

Cohen does not own shares of Microsoft, and his firm has no banking ties to the company.

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