Life at Microsoft in the post-Gates era

With Bill Gates preparing to step down as Microsoft chairman, analysts and observers disagree on the impact his departure will have
Written by Tim Ferguson, Contributor

Bill Gates steps down as Microsoft chairman on 27 June, effectively ending his day-to-day involvement with the company.

As the end of an era draws near, ZDNet.co.uk sister site silicon.com looks at what Bill Gates's departure will mean for the company he founded in a world now dominated by the internet and Google.

After 30 years as figurehead and leader of Microsoft, the company will have to look elsewhere for ideas, innovation and insight in order to continue its success and counter the threats posed by rivals such as Google.

Gates was, and still is, a technology genius, as well as a superb and ruthless businessman, but, with the plan for his departure more than two years old, how much of an impact will it actually have on Microsoft?

Mary-Jo Foley, author of several books on Microsoft and a ZDNet.com blogger, said the company may struggle on the technology front once Gates leaves.

"Sure, [Gates] wasn't developing software for the past decade plus. But he still was involved in many product meetings and served as a champion for a number of technologies that might never have seen the light of day without his guidance," she said.

She added there may well be a profound change in the company's priorities with Steve Ballmer in charge, including in terms of the kinds of employees it promotes and hires.

Foley said: "I foresee sales-focused guys getting more power at Microsoft. 'Steve's guys' — Ballmer's favourites — are going to be more valued in the Microsoft 2.0 world than are 'Bill's guys' — the tech heads."

She also claimed that Ray Ozzie and Craig Mundie — who will jointly take over from Gates — are not as "visionary, recognisable or feared" as their predecessor.

This shift may well mean a battle between "software traditionalists" and "cloud believers" will come to the fore at Redmond.

According to Foley, a group of senior Microsoft people still hope cloud computing is a "fad" and are keen to see the world of "fat clients and fat profits" continue.

"They hated the idea of a Microsoft Yahoo acquisition and think Microsoft's Live initiatives are a big waste of time, money and resources," she said.

However, according to Foley, the backers of chief software architect Ray Ozzie will continue to focus on providing software via the web and making Microsoft a bigger player in this area.

Another big issue for Microsoft is to look at how it can focus on certain areas rather than "trying a bit of everything", Foley said.

"Yes, they need to be investing in cloud/utility computing. But do they need to be building Zune 3.0 or a health-record repository? I'm not convinced," Foley added.

No dramatic impact?
In contrast, Rob Horwitz, co-founder of analyst house Directions on Microsoft, suggested the departure of Gates may not have such a dramatic impact.

"Especially over the past 10 years, many functions, by necessity, have been gradually distributed to others. So Gates's retirement represents the tail end of a curve rather than a steep step," said Horwitz.

He added that Gates's role "long since outgrew one person", meaning his departure will no longer have the impact it might once have done.

Gates's role once included acting as the public face of the company, as well as the chief visionary that set the broad strategic direction.

Other roles that have gradually been transferred to other individuals include making sure technology is commercially viable and resolving technology issues across divisions.

But David Mitchell, senior vice president of research at technology-industry analyst Ovum, said the new era for Microsoft will force the company to face two big challenges.

The first challenge is the diversity within the business, which Mitchell said he feels will make it hard to define a cohesive corporate strategy.

With products ranging from the Xbox to Windows and SQL Server to the Dynamics CRM portfolio, the company has a lot to contend with.

"Creating and sustaining a corporate vision and strategy against a backdrop of this diversity is hugely challenging," Mitchell said.

The other major challenge has been created by Microsoft's success over the years, as many companies now "consciously attack Microsoft at any opportunity" and are keen to claim that they're anything but Microsoft, said Mitchell.

He added that the regulatory reviews that have taken place around the world have created a "difficult climate" for Microsoft.

But Mitchell stressed that Microsoft remains one of the most successful companies on the planet, with strong revenues and impressive margins, and said this isn't about to change overnight.

"[Microsoft] has taken some difficult decisions recently and is focusing much more on the online world, beginning another phase of the reinvention of the company," Mitchell concluded.

Editorial standards