It’s been 31 years since Bill Gates dropped out of Harvard to found Microsoft Corp. The software powerhouse now runs most of the world’s computers and he is the richest man on the planet.
On Thursday, Gates said he will give up his day-to-day responsibilities in two years to focus more time on his charitable foundation. He will work “10-hour days” until July 2008 to help with the executive transition, but then will shed his duties as Microsoft’s chief software architect. He will remain chairman.
The departure of the world’s best-known technologist from the company he nurtured from scratch comes at a time when Microsoft is under increasing pressure from a crop of relatively new Internet competitors–Google Inc., eBay and Yahoo Inc., and others–that have slowly eroded Microsoft’s dominance.
Furthermore, Gates, 50, who stepped down as Microsoft’s chief executive officer in 2000 for his role as software architect, has been at the forefront of numerous initiatives at the company in recent years.
Craig Mundie, Microsoft’s chief technical officer, will immediately take the new title of chief research and strategy officer and will work with Gates in those areas.
Microsoft is putting its software on video-game consoles, hand-held devices, television sets and later this year will begin releasing, after an embarrassing delay, the next generation of its ubiquitous operating system. Another critical issue that Gates has championed is tightening the security holes that have plagued the Windows software platform in recent years, leading to an escalating wave of cyber-crime that has cost companies and consumers billions of dollars.
“Microsoft is at an interesting point at its history,” said David Smith, the principal Microsoft analyst for Gartner. “It is facing very different competition and is changing horses in the middle. But I think it makes sense for them to look for new leadership because it can be difficult for founders to pull off reinvention over and over again.
“In the past they’ve shown an incredible ability to adapt, be nimble,” Smith said. “In recent years, that’s been tougher.”
At a press conference at Microsoft headquarters in Redmond, Wash., held after the financial markets closed, Gates said his decision to step aside should not be considered a retirement.
“It is a reordering of my priorities,” Gates said. “With the success of Microsoft, I have also been given the gift of great wealth,” he said, adding that he has made it clear in the past that almost all of that wealth “would be returned to society through my foundation.”
Gates is the world’s richest man, according to Forbes magazine, with an estimated wealth of $50 billion. He is still Microsoft’s largest shareholder and plans to remain so. “I’m very proud of that,” he said Thursday.
The Bill & Melinda Gates Foundation was formed in 2000 and its assets are now worth $29.1 billion, according to Microsoft. It is the world’s largest philanthropic group and focuses on global health issues and education. Gates is chairman of the foundation, a title he will retain when he steps aside.
“He’s created enormous wealth for so many people and created a business that’s changed the world,” said Gail Meneley of Chicago-based executive consultants, Shields Meneley Partners. “He has the ability now to go from what he’s been doing to creating a life legacy rather than a business legacy.”
Stephen Baker, an analyst for the NPD Group, said Gates’ legacy has been critical for the development of the technology industry.
“When I think of Bill Gates, I think of one of the first guys who was a techie but also a businessman,” he said. “He set the tone.”
Nonetheless, Baker added, as the technology industry is changing, “it’s probably a time for someone else to take that role. It could be Ballmer, it could be Ozzie or a group of guys.”
Steve Ballmer, 50, has been CEO of Microsoft since 2000, when Gates left that role.
Ray Ozzie, 50, on the other hand, joined Microsoft in April 2005 when Microsoft bought his company, Groove Networks. Ozzie is a noted software innovator, who worked on the first electronic spreadsheet, VisiCalc in the early ’80s and was a key force behind Lotus Notes later in the decade. He formed Groove in 1997.
Ozzie was Microsoft’s chief technology officer until Thursday, when he was given Gates’ title of chief software architect.
“They really need a full-time chief architect, somebody who’s really current on technology and Ozzie is much more current than Bill,” said Rob Enderle, principal analyst at San Jose-based Enderle Group. “This allows Bill to mentor Ray. That mentoring probably will be very well received.”
He called the two-year transition good for Microsoft.
“At different times in a company’s life founders have to leave, and it’s better to do it in a gradual way instead of suddenly and dramatically,” Enderle said. “It provides for a much easier transition.”
Baker said the pressing issues at Microsoft–ranging from fixing security flaws to battling Google–will not be hurt by Gates’ departure. “Bill knows what has to be done, but everyone else does, too,” he said.
“Bill tends to generate a lot of noise wherever he goes, so it could be better for Microsoft. It’s like when Carly Fiorina left Hewlett-Packard. She was very much a lightning rod and her personality got in the way. Now HP can quietly go about their business, and to some extent, that could be a good thing for Microsoft as well,” Baker said.
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Gates founded Microsoft in 1975 with Paul Allen. “We had big dreams,” Gates said Thursday. “We talked about having a computer on every desk and in every home.”
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Bill Gates
Full name: William Henry Gates III
Title: Chairman and co-founder of Microsoft Corp.
Microsoft revenue: $39.79 billion*
Net worth: $50 billion, making him richest man in the world
Years at top of rich list: 12
Birth date: Oct. 28, 1955
Education: dropped out of Harvard University during his junior year
Experience: Founded Microsoft Corp. with childhood friend, Paul Allen, 1975; served as chief executive until 2000, chief software architect 2000-06; remains chairman; founded the Bill and Melinda Gates Foundation, 2000.
Family: wife, Melinda; three children
*Fiscal year ending June 2005
Source: Associated Press, Microsoft Corp., Tribune research
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Ray Ozzie
Birth date: Nov. 20, 1955
Education: Bachelor’s degree in computer science, University of Illinois at Urbana-Champaign.
Experience: Worked on VisiCalc spreadsheet program; created Lotus Notes, now part of IBM Corp.; founded Groove Networks, 1997; joined Microsoft Corp. when it acquired Groove in 2005; named chief software architect, 2006.
Family: Wife, Dawna; two children
Source: Associated Press