Scott Ard, Ina Fried
Bill Gates, the man who started Microsoft and has been its public face throughout its three decades of existence, plans to step away from daily work at the company.
Gates announced on Thursday that he will gradually relinquish his current role, ceding the title of chief software architect immediately, while remaining a full-time employee for the next two years. In July 2008, he will remain as a part-time employee and chairman.
The announcement comes as his company battles pressures on all fronts: a sagging share price, competition from Google and nagging delays in the Vista operating system.
In a press conference held on Thursday after the stock markets had closed for regular trading, Gates announced that over the next two years he will gradually step away from his daily responsibilities at the company he co-founded some 30 years ago.
Microsoft's chief technical officer Ray Ozzie will immediately assume the title of chief software architect, Gates said. In addition, Craig Mundie, CTO for advanced strategies and policy, will immediately take the new title of chief research and strategy officer and will assume Gates' responsibilities for the company's research and incubation efforts.
Gates will work side-by-side with Ozzie throughout the transition period, but that a year from now, Ozzie and Mundie will begin reporting directly to CEO Steve Ballmer.
Gates explained that he has been working part time for the Bill & Melinda Gates Foundation and full time for a company that has made him the richest man in the world, and he wished to reverse those priorities.
"The road ahead for Microsoft is as bright as ever," Gates said in a press conference here, noting that he plans to work full time until June 2007 and plans to remain as chairman for the foreseeable future. "So many seeds we have planted have just started to grow."
Gates said that his role has already changed significantly from the company's early days, when he liked to review each line of code and interview each job applicant. Although he said he likes to think he still has a significant impact on the broad range of company activities, he said that the products are already in others' hands.
"The world has had a tendency to focus a disproportionate amount of attention on me," Gates said.
Although Gates will lower his profile at Microsoft, he will probably still have a huge effect on the company, predicted Nathan Myhrvold, CEO of Intellectual Ventures and former chief scientist at Microsoft.
"Part time for Bill Gates is full time for anyone else in this industry," he said. "I remember when he got married. People said, 'Oh, this will slow him down.' But it didn't."
Ballmer took the opportunity to characterise Gates' move as a broader shift for Microsoft, which has come under fire by some analysts, investors and employees for moving too slowly. "We're really also announcing the transition we are making as a company," he said.
He pointed specifically to work the company is doing, led by Ozzie, to add services to everything it does, as well as a move beyond the PC into other devices such as mobile phones and televisions.
In the audience for Gates' press conference were many of the company's business and technical leaders, including Ozzie, Mundie, retiring Windows chief Jim Allchin, incoming Windows chief Steven Sinofsky, as well as the three divisional presidents: Jeff Raikes, Kevin Johnson and Robbie Bach.
As for the company's stagnant stock price in recent years, he said, "Stock markets do what they do. That's their job."
Ballmer acknowledged that the company has "an opportunity to do better in some of the areas" in which it has products, but defended the company's overall record. "I think our company has performed very well," he said.
Gates shocked the technology world in 2000 with a surprise announcement that he would hand over the CEO role to Ballmer but remain as chairman. At the time, Gates also took on a new role as chief software architect.
In recent months, Gates and Ballmer have been planning for the company's founder to step back further. The company began making plans in earnest at a board retreat in March. At that time, the directors made plans to discuss the subject on a mid-June conference call.
Gates, Ballmer and the rest of Microsoft's directors finalised plans on a conference call on Tuesday. However, the topic had been on both leaders' minds for some time, including when Microsoft made the decision to acquire Ozzie's Groove Networks back in 2005.
"Certainly Bill and I had begun that discussion," Ballmer said at the press conference.
While Microsoft continues to perform well financially -- it pockets nearly $1bn per month on quarterly sales of about $11bn -- the company's growth prospects and ability to compete with a new breed of competitors has caused its stock price to stagnate. Shares closed at $22.07 on Thursday in regular trading, down from a 52-week high of $28.38. Shares have slipped steadily since trading at about $35 in 2001. (Following the announcement of Gates' plans, shares slipped about 8 cents on Thursday.)
Gates, 50, founded Microsoft in 1975 with high-school buddy Paul Allen to sell a version of the Basic programming language for the Altair computer. The company had considerable success in the 1980s, partly as a creator of software applications for Apple's Macintosh computer.
But it was the company's decision to enter the operating system business that would propel it to the top of the technology world. The company's Windows OS runs on more than 90 per cent of the world's PCs. The success briefly pushed Gates' net worth, largely through his Microsoft holdings, past $100bn in 1999. Gates currently holds about 977 million shares.
According to Forbes magazine, he is the richest person in the world with a net worth of $50bn in 2005.
"Gates certainly has been a driving force in the industry, for better and for worse. I think if you go back to 1981, few would have predicted the degree to which one OS would unite 95 per cent of the PCs around the world," said Nathan Brookwood, an analyst with Insight 64.
"As Microsoft has grown, Gates' ability to contribute at a technical level has become ever less critical to the company's success. I would suspect it won't be very different from a technical standpoint with him not involved on a full-time basis," Brookwood said.
"He was really the first technology-oriented entrepreneur who was also a great businessman," wrote Stephen Baker, an analyst with NPD Techworld, in an email interview. "He kind of legitimised the idea that techies could make money and it was okay."
Gates put business success ahead of pure technology concerns when it came to his company, which probably accounts for some of the backlash against him and Microsoft from the technology community over the years, Baker wrote. "I think if you look at Google today, they are running into the same headwind, admired entrepreneurs doing good things technologically but now being challenged by needing to balance making money and building products."
And former Microsoft chief scientist Myhvold said that even after Gates is no longer roaming the halls daily, the company "has got tremendous opportunities ahead of it. Look at how dynamic IBM has remained."
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