Why Gates Stepped Down

Steve Ballmer's promotion to Microsoft chief executive officer on Thursday didn't really surprise to industry analysts, although the timing of the announcement raised a few eyebrows.

"It was pretty much expected," said Tim Bajarin, president of market research company Creative Strategies in Campbell, California. He added that Bill Gates began stepping down from the day-to-day running of Microsoft a long time ago, even before he appointed Ballmer to the post of company president in July 1998.

"It's been in the cards for a while," agreed Larry Perlstein, research director, Research Advisory Services, at Gartner Group. "The antitrust case has eaten up an inordinate amount of Gates's time, taking him away from what he loves best--driving the technology direction of the company."

"Gates really felt he wanted to get back to his roots in software design and software strategy," Bajarin said.

What Microsoft lacks at present is a comprehensive strategy for bringing all of its disparate software products together, Bajarin said. "If Microsoft wants to be around ten years from now, it needs to put together a unified strategy for software. Bill realized that the only person who can do it is him. It's what he does best," he said.

Microsoft has tried in the past to articulate an underlying strategy for its entire product portfolio, but has had to make changes to its existing product set and to its company structure, Perlstein said. "They've not reached a stage where it's all synched up," he said, adding that Microsoft should be able to finally achieve its goal in the middle of this year once Windows 2000 and the software dependent on the new operating system have been launched.

Coincidental Timing?

Creative's Bajarin said that he thought the timing of Thursday's announcement had nothing to do with the ongoing Department of Justice trial against Microsoft. (The software giant is due to make its conclusions of law in the case tomorrow.) "This has been coming for ages, the timing is purely coincidental," Bajarin said.

However, Rob Enderle, a senior analyst at Giga Information Group in San Jose, California, said that the Microsoft announcement was deliberately timed to give the software giant a chance to respond publicly to rumors that plans to break up the company are already being discussed by U.S. government prosecutors in the antitrust trial.

Microsoft probably had planned to make Thursday's announcement later this year, but advanced the news in order to create a significant forum for Gates and Ballmer to make their pitches on the antitrust case, Enderle said.

Chris Le Tocq, a research director with Gartner Group, said that Ballmer's ascendancy represents a change in Microsoft's approach to the ongoing antitrust case.

"If Gates represents the emotional side of Microsoft, Ballmer--as far as it's possible for Microsoft management--represents the rational side," he said, with Ballmer talking about "clever ways" to reach a settlement with the U.S. government.

"Steve's the right guy for the [CEO] job," Le Tocq added. "Microsoft is a religion for Bill, while it's a job for Steve."