Rosen, 67, has been a force to be reckoned with at Compaq. The longtime chairman was behind the ousting of founder Rod Canion in the early 1990s and former CEO Eckhard Pfeiffer in April 1999. He is a founding member of Compaq's board, which was formed in 1982. He has served as chairman since 1983.
Rosen will become chairman emeritus, an honorary position.
Ascending to the position of chairman, which no other CEO has held at Compaq, solidifies Capellas' position, who after 14 months as chief executive has engineered a turnaround at the company.
Capellas, 46, came to Compaq in 1998 as the chief information officer.
His surprise promotion to chief executive last year caused some analysts to speculate he had been picked as a front man for Rosen, rather than for his merits. Before Capellas took the CEO's seat, Rosen and two other board members ran Compaq following Pfeiffer's departure.
But Capellas' ascension to chairman of the board could squelch any doubts about his future at Compaq's helm. Capellas is also board president.
In a memo to Compaq employees today, Rosen offered his views on Capellas.
"I am also delighted to report that the board has unanimously elected Michael Capellas to succeed me as chairman," Rosen wrote. "Michael is ideally suited to lead this company as chairman, president and CEO. He has proven his leadership during one of the most challenging periods in the company's history."
Technology Business Research analyst Lindy Lesperance called the move a "clear endorsement" of Capellas' performance so far.
"He's definitely proven that he's capable of putting forth solid strategies in terms of the direction of the company and looking at it on a more granular level for fine-tuning operations," Lesperance said.
The timing of the move is interesting. Soon after Hewlett-Packard picked Carly Fiornia as chief executive last year, Compaq appointed Capellas as its CEO. Both companies had searched for many months before choosing new chief executives.
HP last week added chairman to Fiorina's title, with again Compaq following closely with its own move.
"It's almost like they made it through their probationary periods," Lesperance said.