As the Microsoft CEO rumors churn: The Gates factor

As the Microsoft CEO rumors churn: The Gates factor

Summary: Bill Gates to take on more of an active role at Microsoft under the next CEO: Reality or image? I vote the latter.

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As Microsoft allegedly edges closer to naming its new CEO, rumors about a new, more involved role for company founder Bill Gates are gaining steam, too.

gatesasceoassistant

According to three different reports from the past few days (Re/code, Bloomberg, Wall Street Journal), Microsoft board chairman Gates may end up resigning as chair to take on a more active product-development role at the company.

As I've blogged before, I do not have any first-hand board-level leaks about the CEO appointment process. I don't know if Microsoft's current Cloud and Enterprise chief Satya Nadella really will end up taking on the CEO job. And I don't know what kind of talks are happening behind the scenes, if any, involving Gates.

What I can comment on, however, is positioning vs. reality. And when it comes to industry legend Gates, positioning is a tricky subject.

When Gates resigned from his day-to-day duties at Microsoft six years ago, Microsoft officials went out of their way to insist that even though Gates was going to be working full time at his foundation, he'd still be very involved in decision-making at Microsoft.

The reality? From all accounts I've heard, he wasn't. I am sure he might have opined on products, strategies and reorgs, but Gates had a lot of other non-Microsoft things on his plate. His focus has been on malaria and public health far more than on Bing and Outlook.com, I'd wager.

But instead of treating Gates' distance as a liability, Microsoft image makers played it up as a strength. The public message became: It's OK that Bill's not as involved. Even though he did many amazing things while CEO and Chief Software Architect, he also made some blunders, like refusing to settle massive, expensive lawsuits and allowing too many crazy projects (and technologists) to run amok. It took a business guy, CEO No. 2 Steve Ballmer, years to undo some of these missteps, so the story went.

Now, if the rumors about Gates' reinvolvement in day-to-day work at the company are correct, Microsoft officials are going to have some fancy footwork to do.

Though it might make more strategic sense to have Ballmer, who has been running the company for the past 20 years, be the one helping the next CEO come up to speed, Microsoft execs need to distance themselves from Ballmer if they are to portray the company as changing.

Even though Ballmer arguably knows Microsoft's current products and plans better than Gates, Gates may need to play the role of the "white knight" whom officials hope will make someone who has never been CEO of a major company (Nadella) look less "green." Nadella recently told me he has been receiving some helpful guidance from Ballmer about running teams and honing product strategies. But now that Ballmer is being edged out, being his buddy may be more of a PR liability than asset.

Gates recently insisted that he plans to continue to make running his foundation his life work. He has said this before -- repeatedly, even. Gates is selling off more and more of his Microsoft stock, and soon is likely to be eclipsed by Ballmer as the largest individual Microsoft shareholder. It's a gamble to position someone who has been largely out of the day-to-day tech loop for the past six-plus years as a selling point... even if that someone is THE Bill Gates.

What's your take? Would making Gates the next Microsoft CEO's right-hand man help Microsoft more than hurt the company at this point?

Topic: Steve Ballmer: The Exit Interview

About

Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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  • Hard to say...

    ...unless one is privy to the internal deliberations of MS' board and senior management, or Gates himself has expressed an interest.
    John L. Ries
    • Making a comeback

      I hope Mr Gates can be around for some kind of product development involvement regarding enterprise software. He might not be fully able to understand the new Open Source reality and how the concept changed entirely the business. I am not sure also that he would be the key guy for the future of Windows. I would prefer to see him work on MS secret OS projet, the one that can’t run an X86 applications. At a conceptual level, his input would be very helpful. He is still a very clever man.
      gbouchard99@...
  • As the Microsoft CEO rumors churn: The Gates factor

    Sounds like nothing more than a rumor. If Bill Gates is repeatedly saying he doesn't want to go back to running the company and is concentrating on on his charity then there is some truth in that part of it. I can see him giving some advice and general direction though but nothing that would be running day to day operations.
    Loverock.Davidson
    • rumors as rumors...

      I am OK with rumors. I am not OK when people treat rumors like a fact. This Nutella has no experience in managing a mega tech company what so ever. He was just promoted from a senor manager a few years ago. He has little to no experience in how to run a mobile business. This guy is simple not qualified to be even considered. Many people talking like he is pretty much the one chosen. Because WSJ said so, doesn't make it truth.
      jk_10
      • It's not hard to use people's correct names

        All it takes is a copy and paste operation.

        It's always possible that your intent was to deride Mr. Nadella, but I don't think that's ever justified.
        John L. Ries
        • it's obvious

          that I don't like this guy. I didn't try to hide. I don't like Lady Gaga not because Lady Gaga isn't a good singer. She is but as good as people give her credit for. This guy is simple not at this level, as what he is now, he is fine. But CEO of MSFT is something in his reach. I would name a ton of people in msft who are more qualified. I think if he is assigned CEO, which I don't think will ever happen, many executives will leave. Remember the one who left just before he was promoted?
          jk_10
          • You can dislike people...

            ...without deriding them. Matter of fact, you don't have to be rude at all.
            John L. Ries
          • Whenever a new CEO gets named, other executives leave

            In any company, this happens. Some are simply fired (for incompetence, or as a preemptive strike before they have the chance to stab the new CEO in the back). Some will leave to head up or start other companies.

            The only way naming a new CEO for a company as huge as Microsoft will NOT lead to major changes to the executive suite is if the new CEO is seen as an ineffectual short-timer, and the executives who stay have enough power to keep their jobs and enough savvy to wait patiently for a chance to stab their new leader in the back.
            ssaha
          • what a difference a day makes

            He was indeed named CEO of Microsoft, and Bill is resigning as chairman of the board of directors, and will devote a third of his time to Microsoft. According to his video, Bill was asked by Nadella to have a more active role in the company.
            dhays
  • Wow, tough question

    The industry has changed so much since Gates left MS. I don't think he could return MS to its glory days but as a 'interdependent consultant' to the CEO he might be helpful in tightening the vision MS seems to be currently lacking.
    FrankInKy
    • Maybe not as far fetched

      I thought, "that's crazy" at first, too. But fact is, in his current work he is operating as a leader (not technically as CEO, but one of three co-chairs), and he's constantly meeting with world leaders, giving speeches, etc. If Nadella has the tech cred but needs help on CEO/leadership, that may actually be something Gates can do quite well for him. If people seriously considered the 68-year-old CEO of Ford Motor Company for the job, then Gates as an advisor is anything but too far removed. In addition, if Nadella has the visible backing of the company founder, it'll make his job easier internally until he has established himself. He does have to lead 130,000 employees, not all of which have automatic loyalty to him.
      WebSiteManager
      • So, Gates is the "muscle" with influence

        and Nadella is the visionary? You might be onto something, kind of symbiotic.
        FrankInKy
    • I don't think anyone can restore the glory days

      From all appearances, Steve Ballmer has been trying for 14 years and failing miserably at it. Fortunately for MS, it's not necessary to bring back the 1990s to be successful. All it really has to do is to sell products people want to buy for considerably more than it costs to provide them (what all businesses have to do). Gates is known to be highly intelligent, a master tactician, and and an expert technologist in his own right; and he has the advantage of not only being the founder, but having been associated with MS at the highest levels for almost his entire adult life. I therefore don't doubt his ability to provide good advice to the board and management, should he desire to do so. He doesn't need to be "special consultant to the CEO"; he can do it from his current post as Chairman.
      John L. Ries
      • Nobody can restore the "glory days".

        I would agree that nobody can really restore the glory days of Microsoft. Certainly nobody on their own, and I think part of not understanding the dynamics of that is from not understanding what the glory days really were for Microsoft.

        The "glory days" as they are being referred to, in many respects are not so different in some ways then what they are today for Microsoft. The thing is, there are differences and those differences do make for a substantive difference in the entire IT landscape. In a large sense, returning Microsoft to its "glory days" would literally amount to rolling back the vast majority of the modern day IT landscape. And as I said, that's a task not only far beyond the capacity of any one man, its about as close to a practical impossibility as your going to get.

        What Microsofts glory days were in effect was an IT landscape with not only no direct strong competition for Microsofts prime software, which was PC/laptop operating systems and Microsoft Office, but also there were no other major form factors or platforms around for day to day computing for the average person at home or at work. PC and laptop style computing for the vast majority of the world was where it was at and Microsoft had a lock on the operating systems and Office productivity suites for 90%+ of those. And of course, that made for a whole lot of glory for Microsoft when there isn't much of anything to even talk about beyond PC's and laptops in those days.

        And when we look at whats changed and what is the same, it starts to get interesting. Because the truth still is, that what is the same is that Microsoft is still the 90%+ market share holder of PC and laptop operating systems. What is also true is that even today Windows install base increases every year, although that number increases ever so much more slowly then in the past as anyone with a brain would have predicted, as the market for people and businesses that can afford PC's and/or laptops gradually becomes saturated and with hardware selling at dirt cheap prices that's better and more reliable than ever before, replacement PC sales are tanking with some significant severity as well. It simply means that while Microsoft has kept a gorilla like stranglehold on their traditional market, sales of their frontline product have been receding significantly on a year by year basis.

        The difference in todays IT environment is of course there are now numerous platforms for varying levels of day to day computing that do not rely on Microsofts operating systems or Office applications. We of course know them as primarily smartphones and tablets. Soon perhaps even Google Glass and some others might come along. Microsoft of course suffers from having very little profile in that segment of the IT market and as such with every kid and adult on the street corner with a smartphone in their hand, there is most certainly something to talk about in IT circles beyond traditional desktop and laptop computers.

        And that takes away a great deal of "glory". Simply think of it in terms of how glorified one would be if they were by far the most prominent and powerful athlete in a sport where it was the only significant sport played, then all of a sudden two or three more sports start getting played in very large numbers as well, and the glorified athlete from the original one sport was having a difficult time competing in the new sports although he was still just as dominant in his original sport and just as many were still watching and interested in his original sport.

        Way less glory for sure.

        But! In seriousness, its not as though Microsoft has seriously faltered, certainly at least not yet. While there are those who certainly love to scream at the top of their lungs that Microsoft is finished, its hardly the case, again, at least not yet. The problem with already trying to discount Microsoft as still a huge player in the IT industry is that they still ARE a huge player in the IT industry and they are still quite profitable, and are no where near on the verge of collapsing at all. Their prime products in Windows and Office is still used pretty much just as often as it ever was. There is not any significant difference in the landscape where Microsoft plays because most of the new devices are no where near ready to take over the area of the market where Windows PC's are king. Again, I recognize that there are some who claim they either are ready or darn near ready, the problem is the vast majority of the world currently dosnt agree.

        Go around to any office, and the fact is to most homes, ask the people there; if you absolutely HAD TO have either your smartphones and tablets vanish for years OR your PC's and laptops vanish for years, which situation would you chose to live with?

        I do not hesitate for even a second to point out that almost nobody can just simply go without their Windows computer, or their Mac or Linux box for that matter. Ive posed this question to a few people and after some jokes about how addicted they are to their phone or tablet they all admit that living without a phone or a tablet would be incredibly annoying to them now, going without whatever version of a PC they use, would be fatal enough that it would cause them to actually rebuild their entire business, if possible and if it could somehow survive the downtime, not sure how Amazon would make out for example, and quite a few have mentioned how they would need to buy a typewriter and learn how to spell better.

        No, tablets and smartphones do not run the world yet.

        The fact is, although the glory days of Microsoft appear to be gone forever, they are not much worse off at all, for now, and they are actively trying to find ways to compete in the new market areas and will probably have enough success to keep them relevant.

        You just really have to understand what Microsoft glory days really were, and accept what the market really is today, even if it isn't the market of your dreams where MS is no longer King of desktop and laptop computing.
        Cayble
    • As long as Gates and Ballmer are the company's ...

      ... two largest stockholders, they wield as much power as they want. Once they are both off the board, all bets are off.
      M Wagner
  • It's a good move for Gates to return.

    1.) Who in there right mind wants to see there baby die?
    2.) Is there really anyone capable enough to lead? Apparently not, MS is floundering.
    3.) Gates returning will give new insight from his experiences outside of MS. Much like S. Jobs.
    .
    Gates may have experimented with a lot of off beat stuff and that may very well have floundered MS's income BUT when your on top your not going to change what works, Bill did. He looked for other ground breaking items to incorporate into MS. Much like Apple. Tho MS is not a manufacture of hardware that did hinder MS's expansion. Didn't MS come out with a Tablet LONG before anyone else? There's always prototypes and first runs and another business will re-massage said item... just like Apple did.
    A main problem MS has is not Gates, it needs MS in general to follow through to a product the customer really wants. Go out in the field and talk to consumers.
    Well gee, Bill has been in the field since 2006... hummmmm.
    fm-usa
  • I sure hope Gates and Ballmer stick around to give new product advice.

    Sincerely,
    An AAPL shareholder
    Userama
    • Ya. Sure you do. Make me laugh.

      Your an AAPL shareholder?? Ever wonder what your stock will be worth in a few short years once the tablet and smartphone markets are as saturated as the PC market is??

      I guess your hoping to high heaven that someone, anyone at Apple will think of some brilliant new device like the iPad touch was that can be converted into three other new devices.

      Just keep in mind chum, its been an awful long time since the iPhone was first released to the public, and as Steve Jobs once said, the iPod touch was the training wheels for that. Its been a long time chum, a very long time. Lets keep in mind the iPad flowed directly from the iPhone/iPod touch inventiveness. It all came from one invention and we are still waiting for Apples invention #2 that starts a new round of billions in sales. Because as with all these kinds of devices, we have seen there is a market saturation effect.

      And its hitting smartphones and tablets faster than ever. Soon it wont be hard to get a smartphone with such killer hardware there will be little to no point in upgrading it for years. Unless upgrades are free, and that will only happen so long as the market isn't saturated with customers that are happy with what they got. Carriers provide incentive discounts. They may not always exist the same way they do today.

      So ya, heres hoping that Apple can figure out what to do next, the first time took them long enough-until somewhere abouts 2007 I guess, maybe the next one will take even longer. And if it does, that's not going to go well for Apple in the long run.
      Cayble
    • Let me guess -

      you bought 500 shares for roughly $3,500, and the are now worth over $250,000?

      Close?
      William.Farrel