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Bill Gates departs from Microsoft

20th June 2008

With Bill Gates' exit, Microsoft loses its public face and greatest advocate Bill Gates ends his full-time job at Microsoft and the company opens for business as if nothing has changed.

The 'transition', as it is called inside the company, was announced two years ago.

On the face of it, the only difference after 27 June will be that Gates will be non-executive chairman rather than executive chairman, spending just one day a week on Microsoft business.

The new leaders, none much younger than Gates himself, mix warm tributes to their founder with reassurances that all will be fine without him.

What they're going to lose is that founding focus, and the ability to rally the troops

Timeline: Bill Gates' career

Ray Ozzie, who took on Gates' role as chief software architect two years ago, says the company is now so big there is "no single point of failure".

And Steve Ballmer, Gates' long-time partner, and chief executive since 2000, says Microsoft "won't miss a beat" as a result of next week's move.

But Gates' departure has a symbolic value that no amount of PR planning can avoid.

Microsoft staffers who don't know the official company line happily admit that "Bill is Microsoft". And outsiders agree:

"No-one speaks Microsoft, lives Microsoft, embodies Microsoft as Bill Gates does," says Charlene Li, from consultants Forrester Research.

"What they're going to lose is that founding focus, and the ability to rally the troops."

Gates' achievement since setting up Microsoft in 1975 has been world-changing.

Mission statement

Bill Gates has all but accomplished his famous mission statement, to put "a computer on every desk and in every home" - at least in developed countries. And Microsoft's extraordinary financial performance - with profit margins still an enviable 30% - has made him the richest man in the world for 13 straight years according to Fortune magazine's authoritative list.

To those who say the computer revolution would have happened without him, he can point out that more than 90% of computers run Microsoft's Windows.

With programming skills to add credibility to his business success, he is a hard act to follow.

Steve Ballmer is a big character with a strong track record at Microsoft, but he will never acquire Gates' status.

For Gates, all the PR positives have been counterbalanced by Microsoft's apparently endless anti-trust battles, and the leagues of Microsoft-haters among the technorati, who persist in thinking of Microsoft as the evil empire. But Gates' altruism is a new factor putting him on the side of the angels.

In his post-Microsoft life, he will be concentrating on giving away his money - promoting research into neglected diseases and finding other ways to improve the lives of the poor of the world.

For even the most cynical, it's hard to argue that his $30bn donation to his Foundation, with the promise of more to come over the years ahead, is some kind of grand public relations exercise.

The Bill and Melinda Gates Foundation claims to be the world's biggest philanthropic organisation, and none have yet stepped forward to contradict that.

Even with Gates only popping in as a part-timer, Microsoft looks set fair for a good few years. Its cash cows, Windows and Office, still earn huge sums and there are new enterprises such as Xbox and Windows Server, IT in the heart of businesses, that are substantial and growing.

The company makes weekly profits of almost a $1bn. That's about four times as much as Google.

But deep in the psyche of the company is a fear that just as IBM defined the first computer generation and was displaced by Microsoft, so Microsoft could find itself part of the technology infrastructure rather than at the cutting edge.

And the size and solidity of its profits offer no protection against that.

Ray Ozzie admits Microsoft, like other technology giants, always needs to fear "two guys in a garage" who come up with something new and move fast.

"Much as IBM was the defining company in the seventies," says technology writer John Battelle, "and Microsoft in the nineties, I think that this is Google's decade."

Microsoft's recent attempt to buy Yahoo! is a sign that behind the soothing mood music from company HQ is a sense of urgency about the future.

And it has much to do with Google's ever-expanding portfolio of services, any of which could join its runaway search engine as a source of big profits.

Gates himself is keen to keep the Yahoo! bid in perspective, pointing out that if it had been successful it would have represented just 15% of the value of Microsoft.

But it would still have been Microsoft's biggest acquisition, and the bid itself drew attention to the company's poor results from its online businesses.

A botched Yahoo! bid has been, in many ways, the worst possible way of marking Gates' departure. The internet is a high profile part of the company's business to which Gates himself has devoted considerable time and energy.

It was back in 1995 that he wrote his famous company memo, warning of the "internet tidal wave". He said the internet would be as big as the original PC revolution. It was considered an impressive example of his ability to make the company "turn on a dime".

Today Microsoft has extensive web offerings and there's an acceptance that online advertising will be an important part of the revenue mix in future.

But there's relatively little in new income to show from the online focus of the past decade and more.

As Gates leaves to pursue his altruistic work, the internet increasingly looks like unfinished business for Microsoft.

The BBC will look at the secret of Bill Gates' success. The Money Programme special Bill Gates: How a geek changed the World will be shown on Friday, 20 June, on BBC 2 at 1900.

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