Gates to give up Microsoft reins, take up charity duties
Bill Gates is passing the baton at Microsoft Corp., the company he built from a concept in a garage into a multibillion-dollar software company that dominates the world's personal computers.
The news, which was announced by Gates yesterday afternoon, at first seemed explosive, something that might set off a round of hand-wringing among both the company's employees and its investors. Microsoft, after all, hasn't been having an easy time, with its stock price depressed by concerns over competition in new markets and stumbles on recent software design.
As Gates himself explained, "The world has had a tendency to focus a disproportionate amount of attention on me." So the thought he might be jumping ship to turn toward his philanthropic causes should cause a shiver.
However, the announcement was not quite as bold as it first seemed. Gates said that he would immediately hand over his responsibility as chief software architect to Ray Ozzie, a well-regarded developer who founded Lotus Notes and came to Microsoft about a year ago when the company bought his Groove Networks Inc.
Also, Gates promoted Craig Mundie, who began at the company in 1992, to chief research and strategy officer. Mundie has recently led the company's intellectual property negotiations.
Philanthropy, through the $26 billion foundation he set up with his wife, Melinda, would take increasing precedent, he said, adding that Microsoft had given him great wealth and "with great wealth comes great responsibility, a responsibility to give back to society, a responsibility to see that those resources are put to work in the best possible way to help those most in need."
That will be good news for those nonprofits working to improve global health and education. But, as far as the effect on Microsoft, what Gates announced yesterday was really a glacially slow transition that began several years ago and will take at least two more.
Gates left the position of chief executive officer in 2000. Steve Ballmer, whom Gates met during his brief stint at Harvard, remains in that role. Now, Gates has signaled a retreat from the company's day-to-day operations. But that transition will not be complete until July 2008. In the intervening two years, the success or failure of Microsoft's current move into new technologies will most likely be known. And even after that Gates says he plans to remain the company's chairman and will be its largest stockholder, so any radical move in company direction would require his approval.
So what does it all mean?
"Probably not much," says Sanford Bernstein Research analyst Charles DiBona. "For two years there is really no change, then he is just trimming his sails a bit. We don't like to hear of someone of Gates's caliber checking out, but he's not."
Rochdale Research analyst David Eller adds that Gates remains "the go-to guy."
Both analysts said that the biggest effect of the transition will most likely be in the corporate culture, something that won't be immediately obvious. Gates, a Harvard dropout who founded Microsoft with Paul Allen in 1972, is synonymous with the company he built into a software powerhouse. But while tenure there has made Gates one of the richest men in the world, with an estimated $46 billion in net worth, he has remained hands-on.
"Bill Gates has a substantial impact on corporate culture," notes Eller. "Think about being in a small group meeting and having him pop in. That has a huge impact on morale."
Over time, his presence will slowly recede, but very slowly.
"Microsoft is too big a part of his life," Eller says. "I don't envision Microsoft disappearing from it."
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