Bill Gates, the world's richest man who created the world's most highly valued company, once had a vision that a computer would sit on every office desk. Now his dreams have moved out of the office to encompass every aspect of our daily lives.

The man who founded Microsoft 25 years ago announced this week that he was going to step down as chief executive. But few industry rivals or analysts saw his decision to become "chief software architect" and chairman as a sign that the 44-year-old wanted to spend more time with his money. Warren Buffett, the world's best-known investor and mentor to Mr Gates, said: "He certainly couldn't step away from Microsoft - it's his baby."

A rival Silicon Valley executive admitted: "The one thing I've learnt in this business is never, ever underestimate Bill Gates. This is a hugely ambitious move for these guys".

Mr Gates himself was excited by the prospect of his new job and said he would be devoting just as much to it as he did to handling the day-to-day responsibilities.

The father-of-two looked more like the 13-year-old computer programmer he once was when he said: "I'm returning to what I love most - focusing on technologies for the future." The new job "will allow me to dedicate myself full-time to my passion - building great software and strategising on the future".

Most Microsoft watchers believe the new job reflects the company's desire not to be left behind in the internet age.

Although Microsoft was offering few hints about what it would reveal in the near future, industry analysts use the term a "networked future" to explain the way the world is expected to change. And it is this networked future that most analysts expect Gates to focus on in his new role.

Ashok Kumar, analyst at stockbrokers Piper Jaffray, said: "Microsoft will want to develop software for the network. [It recognises] that we have migrated from a pc-centric world to one in which any mobile device can work."

The term network basically describes a sort of limitless warehouse in the sky where individuals can access anything they need from anywhere on earth. This means that anything from an individual's diary to contact details and books they want to read on holiday could be filed on to a computer and then downloaded when required.

There were signs the $500bn company was changing. Just 18 months ago Steve Ballmer, who is to take over as chief executive from his old college friend, was appointed president. Soon after, the company dumped its old mission statement and called for "Windows anywhere, any time and on any device."

Bill Gates talked about the development of "next generation software" this week. But he wants nothing less than for consumers around the world to access anything they need from the latest movie to the latest Harvard research report from any device all using Microsoft software. While other companies such as Sun Microsystems or Novell have focused on the huge market for business customers, Microsoft is likely to want to use its brand name to offer services to consumers as well as big business.

His interest in software has taken him into all sorts of areas. He has talked about a home where Microsoft software can lock your doors and turn off your lights at night. In building his $50m house near the Microsoft campus in Seattle, he attempted to prove that it already could.

His other software dreams include an involvement with a university research project at Carnegie Mellon looking at building an electronic model of the human brain. Mr Kumar said: "People have been trying to do this for ever. There's hardly any limit to his ambitions."

Change is in the nature of the net. Bill Gates himself appeared to accept this when he said this week: "These are dramatic times in our industry. As we look ahead... we recognise that we must refocus and reallocate our resources and talents."

Gates is still sore at almost missing the potential of the net. The company failed to appreciate the impact of Netscape's browser and was overtaken by smaller, hi-tech companies such as AltaVista and Yahoo!.

The Seattle-based giant's whole modus operandi has been called into question by the coming of the web. Although Windows has been used on more than 90% of the world's computers for almost a decade, the company was slow to recognise that it would not be enough to control the web. One industry executive said yesterday: "The days when Microsoft could offer a few shrink-wrapped applications for Windows are gone."

Richard Sherlund, an analyst at Goldman Sachs, said: "For Gates, I believe that this is about making the internet work for Microsoft. That's where his heart is."

It has also been clear for some time, perhaps as far back as 1975 when Gates dropped out of Harvard to build an operating system, that his heart is not on business matters. He said this week that his new role will enable him to go home at night and think of "databases and user interfaces rather than business models and cost structures". His decision was called a "wake-up call" by one industry executive. Not only is he respected for his passion for software, his very presence is expected to have an impact on the company's beleaguered team of programmers.

Art Russell, analyst at stockbroker's Edward Jones, said: "He is frankly considered such a visionary that people just hang on his every word."

Faced with "more competition than it had ever seen before" Microsoft will "get a lot more fire in its belly" because of his new job. The job change significantly comes as the hundreds of engineers who have been working on Windows 2000, the company's latest software programme, are left with time on their hands.

The new job will also mean that Mr Gates can spend more time on new developments rather than his long-running battle with the government. He is widely considered to have seriously misjudged his behaviour during the landmark anti-monopoly battle. Partly in recognition of the fact that he was considered arrogant and condescending towards the law, Mr Gates has been forced to schmooze with Washington power players over the past year, something one executive described as "excruciating" for all concerned.

Bouncing around the stage this week, wearing his trademark v-necked pullover and geeky glasses, Mr Gates said: "I have had the same job for 25 years.

"We achieved a lot of the dreams we had, but today there are more opportunities than ever. I think it's fair to say we haven't seen anything yet."

It also seems fair to say that we haven't seen the last of Bill Gates yet, either.