Analysis: What Bill Gates's Departure Means for Microsoft

Bill Gates may be the public face of Microsoft, but his departure from daily operations at the company could actually strengthen it--and even pave the way for better products.

Gates, who is and will remain chairman of Microsoft's board of directors, today announced that he will give up his job as Microsoft's chief software architect in two years in order to devote more time to the Bill & Melinda Gates Foundation.

Gates's departure will end an unusual division of labor between him and Microsoft chief executive Steve Ballmer, says technology analyst Rob Enderle.

Usually a chief software architect reports to a CEO, but since Gates was also chairman, Ballmer had to report to him. "There really wasn't one person in charge," Enderle says. "This takes Microsoft back to a more traditional structure."

Too Busy to Do the Job

While Wall Street may find the prospect of a Microsoft without Bill Gates unnerving, Gates's "actual impact on the products has fallen off dramatically over the last seven years," Enderle says. Gates was simply too busy with his duties as chairman of Microsoft and of his foundation to devote sufficient attention to being chief software architect--"and that's a full-time job," Enderle says.

"He wasn't really involved in the day-to-day decisions on what went into the product for quite some time," Enderle says. If anything, he adds, Gates was more "schedule-oriented," and had he been more involved, Windows Vista's release might not have been delayed.

"Content? That was to a large extent determined by others," Enderle says, adding that the upcoming departure of Jim Allchin, co-president of Microsoft's Platforms and Services division, will likely have more impact on the future of Windows than will Gates's departure.

Enderle believes that Gates had come to a realization "that he needed to either reengage or step back, and he decided to take that next step."

If Ray Ozzie, who will assume Gates's responsibilities as chief software architect, is up to the job, Microsoft could emerge stronger than ever--and as a result its products could improve, Enderle says.

"We're going to lose an icon, but the company is going to gain a chief software architect," he adds.

Microsoft's Loss, Charity's Gain

Meanwhile, Gates's foundation, which supports innovation in global learning and health, stands to benefit from its founder's increased involvement.

"This is a great day for the developing world," says former Microsoft executive John Wood. "He's going to put all of his passion and energy into the foundation. It will be incredible to see what they can do as a result."

Wood worked with Gates from 1991 to 1999, when he left to start his own philanthropic group, Room to Read, which focuses on providing education for children in the developing world.

Marlin Eller, a former software engineer at Microsoft who once worked across the hall from Gates and who cowrote a book about him, Barbarians Led by Bill Gates, says he wasn't surprised by Gates's announcement.

Eller remembers a company meeting at which other employees were "ragging on Bill" for not devoting more time and money to charity. Gates, Eller recalls, said that from watching his mother's efforts on behalf of the United Way, he knew that running a charity was "real work," and then added: "When I'm older, I will then focus on charity."

Eller added: "I'm glad to hear it, because I like Bill. Bill was one of the smarter guys I've met in my life. If he does do what he said he would do, the benefit he could do for charitable works could be enormous."

Though Gates is retiring from Microsoft, Wood laughed at the idea of the former boy genius relaxing.

"I don't think this will be at all for him kicking back," Wood said. "Working with Bill is a pretty intense experience. Most of the stories are not all that humorous.... He has high expectations of his employees, but they're no higher than the expectations he sets on himself."

Edward N. Albro and Erik Larkin contributed to this story.

Related Links

Here are links to some other stories prompted by the announcement of Bill Gates's impending retirement from Microsoft.

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