|Federer lost in QF Monte Carlo|
The Swiss is widely regarded as the greatest player of all time thanks to a male record of 16 grand slam titles but the winds of change are gusting through men's tennis.
His 6-4 6-4 loss to the Austrian was his first by anyone other than world number one Rafael Nadal or world number two Novak Djokovic since his Paris Masters defeat by Gael Monfils in November, but since then he has only won two tournaments.
The world number three was slightly unlucky against Melzer, who turned almost everything he hit into gold, but Federer also uncharacteristically missed several easy shots.
"Things didn't go my way. All those things accumulated to make it hard," Federer told a slightly tetchy news conference.
"(The wind) always has an effect on both players but being down in the score it didn't help. It was hard."
The second seed, who has never won the Monaco tournament on his least favoured clay surface, had looked imperious in his previous two matches but never got going against the seventh seed on the breezy shores of the Mediterranean.
Melzer broke for 3-2 in the first set when Federer netted the first of a number of forehands and the Austrian then immediately saved a break point on his own serve before taking the set and similarly sealing the second.
The Austrian, keen to reject comparisons with compatriot and former claycourt specialist Thomas Muster, was overjoyed but cautioned against writing off 29-year-old Federer just yet.
"You always have to respect Roger," left-handed Melzer said having shrugged off a back problem in the first game to win.
"For him to be three in the world is a downgrade and if you think about that it's stupid. For me he's the greatest player ever. Every time he loses it's tragic."
Melzer has now beaten Federer, Nadal and Djokovic but acknowledged he would boast about beating the Swiss more than the Spaniard when regaling tales to his children.
"It started to be difficult conditions because the wind picked up. I played a really good match with no mistakes," the world number nine added.
"I'm climbing to the top of my game on clay and it's not Roger's favourite surface."
My Comment : Don't give up yet Federer.