GATES LEAVES MICROSOFT DAY-TO-DAY ROLE BY '08 (WSJ, NYT, FORBES, LAT)

By Stephen Saito

In a move that the Wall Street Journal says is reminiscent of American industry maven John D. Rockfeller, Bill Gates will reduce his role at Microsoft and concentrate on his philanthropic efforts through the Bill and Melissa Gates Foundation. He will remain chairman of the company, but ultimately leave his daily work there in 2008.

In making the announcement, Gates promoted chief technical officers Ray Ozzie and Craig Mundie to essentially shadow and replace him in overseeing product development, with Ozzie becoming chief software architect and Mundie becoming chief research and strategy officer. As Gates told reporters, "It's not a retirement, it's a reordering of my priorities."

The Wall Street Journal writes:

Indeed, just how far Mr. Gates will ultimately divorce himself from Microsoft activities isn't clear. He said he expects to be a senior adviser to the company and remain chairman for the "conceivable future" as well as Microsoft's largest individual shareholder.

Still, the announcement underscores the preeminence of Steve Ballmer, 50, who took over the CEO job in 2000 and has increasingly been putting his own stamp on the organization. The changes could accelerate his plan to push more responsibility to lower-level executives, in hopes of speeding the pace of decision-making.

Meanwhile, the Wall Street Journal also notes that the emergence of Google and other Internet entities may have made the decision easier for Gates, writing:

Some outside observers, however, suggest that Mr. Gates's decision also may reflect the problems Microsoft has faced in meeting challenges from Internet services, such as Google Inc. and Yahoo Inc., and software that is frequently given away.

"Bill Gates was a terrific player in a world where software was in a box and he made a profit on that product," says George Colony, chief executive of the market-research firm Forrester Research. "I think he's having a very difficult time understanding how to compete in a world where that is free."

As for Gates making the decision to leave, it's been in the works for months according to the New York Times, who wrote:

Mr. Gates said that he and Mr. Ballmer had begun discussing a transition some time ago, but that a decision had been made only in the last few weeks. He noted that he had deferred telling Mr. Ballmer of his decision several times, and that his wife, Melinda, a former Microsoft product manager, had reminded him to communicate with his business partner on several occasions.

"I talked with her even before I talked to Steve about this possibility," Mr. Gates said. "I got her advice. For a couple of weeks she said, 'Have you mentioned it to Steve yet?' I said, 'No, it wasn't easy to bring up today, maybe I'll bring it up tomorrow.' "

He said his primary motivation was a desire to spend more time on the issues that he has decided to attack with his foundation, whose resources will continue to swell as Mr. Gates makes good on his commitment to shift most of his fortune, said to be around $50 billion. He remains the largest single shareholder in Microsoft, with 9.6 percent of the stock, a stake currently worth $21.6 billion.

But his decision to begin scaling back at Microsoft comes at a critical juncture for the company, a dominant force in the computing world for a quarter-century. Although revenues are at record levels and the company's profits are running at a stunning $1 billion a month, Wall Street has grown increasingly critical of Microsoft's inability to make significant headway in new markets as diverse as video games, Internet television and Web advertising.

GATES LEAVES MICROSOFT DAY-TO-DAY ROLE BY '08 (WSJ, NYT, FORBES, LAT)

By Stephen Saito

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