RealTime IT News

Gates Takes Another Step Back

UPDATED: Microsoft announced today its chairman Bill Gates will step down from his role as chief software architect, tabbing chief technology officer Ray Ozzie as his immediate successor.

During a joint press conference that was at times emotional, Gates was particularly effusive in his praise for Ballmer, whom he called "the best CEO that I could imagine."

Gates also sought to minimize the impact of his reduced role in the company, deflecting much of the credit for the company's success.

"There's a tendency for people to focus a disproportionate amount of attention on me," he said.

Indeed, both Gates and CEO Steve Ballmer took pains to reassure investors and employees alike that the company remains committed to pursuing its core strategy, which includes developing Microsoft Live and having its software available on multiple devices. Gates said Microsoft has the leadership and engineering talent to execute on that vision.

"Our technological talent is the best in the world, and the same is true of the business organization as well," said Gates.

Gates was also careful to reassure the markets that Ozzie will not be given full rein to do as he pleases right away.

The once and future chairman explained that, while he no longer reviews every line of code as he once did, he has and will continue to review planning for new products and service offerings to ensure that they fit together in a cohesive strategy.

The real transitional point will come in one year, he said, when the presidents of Microsoft's three business divisions will report directly--and exclusively--to Ozzie; for the time being, they will report to both Gates and Ozzie.

Ballmer reiterated the same message, making the point that he and Gates have gradually expanded the roles and decision-making authority to the three division presidents and others throughout the organization in order to groom them for this moment.

And while he denied that Microsoft acquired Groove solely in order to hire Ozzie, he admitted that, "we've wanted to work with Ray for twenty-plus years."

Indeed, analysts believe that Microsoft had been planning this moment carefully, reducing any potential for disruption.

"I'm sure they've been preparing for this, so I don't expect any big changes coming," Randy Dugger, CEO of IT consulting firm Dugger & Associates, told internetnews.com.

Joe Wilcox, an analyst who follows Microsoft for Jupiter Research, agreed that this move has been in the works for some time. He noted that the company first reorganized into seven business units several years ago, and then into three divisions last year.

Far from reflecting confusion or disarray, as some analysts have portrayed them, Wilcox said the steps were a way of, "moving more autonomy to different parts of the organization."

Wilcox also said that elevating Ozzie will allow Microsoft to navigate a period of apparent transition in the business environment.

"There's been all this hype about Web 2.0 and doing stuff in the browser," Wilcox told internetnews.com. "Its business has been on the desktop, but now maybe Microsoft can embrace the Web without being swallowed by it."

Wilcox noted that Microsoft may have been ahead of the curve five years ago when it introduced Hailstorm and .Net, only to pull back when the market rejected that move.

"This may be a way for Microsoft to return to something they wanted to do in the past," said Wilcox.

Indeed, Ballmer said the company would focus tenaciously on Web-oriented products and services such as, "advertising, search, gaming, and mobility," he said.

Gates, who is leaving to spend more time on his global health and education work at the Bill & Melinda Gates Foundation, will continue to serve as the company's chairman and an advisor on development projects after July 2008.

Chief technology officer Craig Mundie will immediately take the new title of chief research and strategy officer and will work with Gates to assume responsibility for the company's research and incubation efforts.

Mundie also will partner with general counsel Brad Smith to direct Microsoft's intellectual property and technology policies.

Microsoft's share price fell half a percent in after-hours trading.