Welcome to the Post-Gates Era
- By John K. Waters
After the news broke late last week that Bill Gates would definitely be
giving up his day-to-day responsibilities at Microsoft (though not for two years) to
focus on the activities of the $29 billion Bill & Melinda Gates Foundation,
I asked around to get some opinions on what this decision might mean for the
company he co-founded and the industry he has come to symbolize.
Rob Enderle, president and principal analyst at the Enderle Group, believes that Gates'
decision will ultimately result in a more effective Microsoft—and a more
''So much of what Gate’s was—good and bad—became part of Microsoft’s culture
that it's often hard to separate the man from the company,'' Enderle says.
''Doing so will probably be very painful for both, but it's also critical for
the growth of both.''
The fact of Gates' personal wealth has become something of a liability for
Microsoft, Enderle says. Gates himself has said that he and his money get far
too much attention. But once he turns to philanthropic work, Gates' staggering
financial wherewithal will probably be good for company again, though the impact
of ''the largest charitable trust that has ever existed'' will ''clearly go well
beyond the technology industry,'' Enderle says.
In the company announcement of Gates' second role shift, the emphasis was on
the strong management team that will, more or less, replace him. Gates gave
up the CEO spot to Steve Ballmer six years ago. He will be handing his
chief-software-architect responsibilities to current CTO Ray Ozzie, who joined
the company last year when Microsoft acquired his company, peer-to-peer software
maker Groove Networks. Ozzie is probably best-known as the creator of Lotus
Notes. Ozzie's job will pass to Craig Mundie, a 14-year Microsoft veteran.
Tom Snyder, president and founder of iNetOffice, a provider of browser-based
office applications, believes that Ray Ozzie is the ideal man to lead Microsoft
through a transition to online and service oriented systems. ''He invented the
category with Lotus Notes,'' Snyder says, ''broadened if further with Groove
Networks, and has the vision to carry Microsoft to its next level.''
Snyder, who worked as a developer at Microsoft for 10 years before striking
out on his own, feels ''encouraged'' by Ozzie's work at the company. ''Being a
small business person myself, I think Ray's recent stint at his own,
medium-sized company will give him a more down-to-earth focus on people friendly
solutions,'' he says. ''I've seen first hand how people, when working insulated
in the tech-heavy Microsoft, can occasionally drift away from 'easy' during the
pursuit of 'powerful.'''
IT advisory and analysis firm ZapThink's
Jason Bloomberg agrees: ''I feel that Ozzie is a good person to take Microsoft
to the next level,'' he says. ''He understands the role of
software-as-a-service, and even more than that, understands the fundamental
architectural and business shift that the movement toward service orientation
The handover of Gates' responsibilities to Ozzie is well-timed, says analyst
Neil Macehiter of specialist IT advisory firm Macehiter Ward-Dutton, and is emblematic
of the shift from the age of client-server to an era of what Ozzie has called
''client-server-services.'' It allows Microsoft to ''present a new face for the
new era: a face, moreover, which is well-respected.''
''Ultimately, in a company of Microsoft's size and complexity, the departure
of Gates can only have a limited material impact,'' Macehiter says. ''And some
of the quotes I have seen since the announcement suggest that he will still be
looking out for the 'big things.' I'm sure he'll still be making suggestions.''
In fact, observes Yankee Group
analyst Laura DiDio, Gates is not retiring (though about half of last
week's headlines proclaimed as much). He's stepping back from the day-to-day in
Redmond, but he'll still be chairman of the company—not to mention its largest
shareholder, with just under a million shares, or about a 10 percent stake.
''There will be no perceptible, immediate or intermediate term impact to
Microsoft customers, the day-to-day company functions or its long-term strategic
direction,'' DiDio writes in her latest ''Research Analysis'' piece. ''His will
be a protracted, orderly transition. Gates is an extremely focused, deliberate
individual. It was clear from his statements that he has planned his withdrawal
with the same precision and prescience that he used to plot his assault on IBM
in the late 1970s, and other rivals throughout the 80s and 90s.''
''In truth,'' DiDio adds, ''it would have been a much bigger deal if Ballmer
had announced his departure. Ballmer runs the sales force and charts the
company’s tactical and strategic direction. It was Ballmer and not Gates who
gave his approval for the controversial 2001 licensing plan that alienated many
customers, and it was Ballmer who overruled himself, scrapping it and building a
new plan more favorable to users. It is Ballmer who has taken the public and
private role of negotiating and often sparring with the European Commission
which is locked in an ongoing antitrust action against Microsoft. In recent
years it is Ballmer who has made war and peace with competitors and rivals like
IBM, Sun, Oracle and the open source community.''
But Gates is turning his primary focus to other things, and that strips
Microsoft of something elemental, say industry watchers at Forrester Research. I sneaked a peak at a
Forrester 'Quick Take' on the news (penned by John R. Rymer, Ted Schadler, and
Erica Driver, with input from Mike Gilpin, Frank E. Gillet, Chris Charron, and
Sally M. Cohen), in which the analysts waxed poetic: ''Gates—his encyclopedic
mind, steely, will, and passion for software technology—is the essence of
Microsoft.... It will take a village to replace him.''
They also offered a couple of worrying predictions: First that Gates'
departure will make it more difficult for the company to attract and maintain
talent. Gates was a 'magnet for elite computer-science talent;' without him,
Google becomes the company with the gravity to pull in the best and brightest.
Second, that Gates' departure will, in the short term at least, cause Microsoft
to harden its historical ''our way or the highway'' position.
Still, as IDC's positively sanguine
''designated Microsoft watcher'' John Gantz writes, ''Tomorrow the sun will rise
in Redmond, the challenges will be the same, and so will the passion to address
them, for Microsoft is a very large company with many smart and capable people.
If managed properly, in the long term this could be a pivotal point—one where
the company begins the process of proving that it can innovate and deliver in
the post-Gates era.''
The post-Gates era. Boy, does that sound weird.
Personally, I believe that Gates' most enduring contribution will be social:
Simply put, he made it cool to be a geek—which is to say, smart. Some
people like to give credit here to Steve Jobs, but Jobs is too mystical and
artsy, which are qualities with inherent coolness. It is Gates—the
four-eyes with the bad posture, reedy voice, and storied pit stains, who, at 50,
has more money than God—who has emerged as the industrial icon of the triumph of
brains—and will—over brawn.
I can't wait to see what he does next.
John K. Waters is a freelance writer based in Silicon Valley. He can be reached
at [email protected].