Williams will stay involved in "product strategy," while Costolo leads the various monetization efforts Twitter has launched in recent months, most of them focused on providing marketing and advertising services.
"Success to us means meeting our potential as a profitable company that can retain its culture and user focus while having a positive impact on the world," Williams wrote in a blog post announcing the leadership shift.
So far, Twitter has been mostly focused on building features for the service and boosting its technical infrastructure, which was noticeably wobbly and prone to crashing in the past.
Developing Twitter as a product is the type of work that Williams is most comfortable with, he said. "I am most satisfied while pushing product direction. Building things is my passion, and I've never been more excited or optimistic about what we have to build," he wrote.
During his tenure, Twitter grew from about 20 employees to 300, while the number of "tweets" posted to the service has grown from 1.25 million daily to 90 million, and registered users have gone from 3 million to more than 160 million.
He didn't go into details about the current or projected revenue of the company, which is privately held.
"I think it is a good move for Twitter," said Gartner analyst Ray Valdes. "Ev Williams' strength is in strategy and product, not so much in other areas such as operations and finance. Twitter needs to marshall all its resources in an optimal way in order to stay on its high-growth track."
As the former CEO of Feedburner, an RSS feed management and advertising company that was acquired by Google, Costolo is well-suited to lead Twitter as it pursues revenue-generating strategies that don't disrupt the service for users, said Jeremiah Owyang, an Altimeter Group analyst.
Like Feedburner, Twitter is heavily focused on social media management and traffic analytics for companies that market products on its service, Owyang said. "He looks to be a very promising leader of the company," he said.
It's safe to expect Williams to remain very involved with the company, especially at the product development level, Owyang said.
Created as a side project within Williams' podcasting company Odeo in 2006, Twitter has become an Internet phenomenon used by private citizens, celebrities, corporations and organizations of all types to share ideas, post comments and promote products and brands via brief text messages no longer than 140 characters. Twitter also has a vibrant community of thousands of third-party developers who have built complementary applications for the service.
Despite its popularity, a nagging concern among industry observers has been whether the company can build a sustainable business that does justice to its status as one of the most popular Internet companies.
