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Tech Industry Reacts To Bill Gates' Exit Plan

As Bill Gates eases out of day-to-day management at Microsoft, it opens the door for new talent and ideas. But it also creates a hard-to-fill void.

John Foley

June 19, 2006

5 Min Read

When Bill Gates disclosed June 15 that he planned to ease out of day-to-day management at Microsoft over the next two years, it drew gasps of surprise from some people in the computer industry and sighs of relief from others.

"Gates' departure is a double-edged sword," says Cynthia Brumfield, president of Emerging Media Dynamics, an IP TV consultancy. "On the one hand, his guiding vision has been critical to the company's success. On the other hand, Microsoft is clearly in need of a fresh direction, and this might be the symbolic and real catalyst for implementing new ideas."

Nowhere is this truer than in Microsoft's interactive TV division, "which has been limping along for years," Brumfield says, adding that the company has recently taken steps to improve that division.

Martin Hubert, president and CEO of Freightgate, an Internet-based supply chain software provider, says, "The timing is good for Gates to get out with style," before things turn downward for Microsoft, given some of the challenges facing the company. The risk, however, is that not having Gates around as much could become yet another challenge for the company.

There's also the possibility that Gates' absence will present opportunities to others. "It may finally make room for less-traditional thinking and new energy and ideas," Hubert says. "For the industry, it may increase speed if the new Microsoft executives take an innovative approach to some of the bait laid out by the guys at Google."

Gates' exit plan doesn't seem like a big deal to one director of a Wall Street financial firm. "Gates doesn't seem to have been running things on a day-to-day level for a while anyway, he says. "I'm sure he'll continue to provide leadership from afar; I don't think he can stay too far away for long."

It's possible that Microsoft's loss will be the computer industry's gain in other ways. "I think it will help the industry because I believe that Gates will try to engage himself in other larger initiatives that are not just limited to being within Microsoft," the financial director says. As a Microsoft customer, he adds, "It won't change anything in my use of Microsoft products or my view of the company." Forrester Group analysts, in a written report, say it won't be easy to fill Gates' shoes, calling him "the most accomplished software technology manager ever. It will take a village to replace him."

Forrester predicts there could be a talent drain at Microsoft because top software engineers may find the company a less interesting place to work without Gates. A key challenge for Microsoft's senior leaders will be to quickly and successfully deliver on the company's "Live" software-as-a-service strategy. "Microsoft is crawling into the future of concise Internet services burdened by its bloated, overengineered, pay-by-the-[user], one-size-fits-all software model," Forrester sums up. "Microsoft now must face the future of ad-supported or subscription-based on-demand software."

Venture capitalist Jim Breyer of Accel Partners sees Ray Ozzie as well-suited to take over some of Gates' responsibilities. Ozzie last week was promoted from CTO to chief software architect, one of Gates' former titles. Gates remains Microsoft's chairman. Breyer sees many similarities between Ozzie and Gates, both renaissance men who envision the blending of enterprise and consumer-oriented technologies. The transition to Ozzie from Gates should be smooth, Breyer says.

Breyer, a board member of Facebook.com, a social network for college students, says Ozzie is passionate about applying social networking technology to business settings. "Many people view Ray as an enterprise software technologist and visionary, but I have seen Ray express deep interest and acumen around the impact of the many important consumer technologies as well," Breyer says. "He has always had strong interest in areas such as search and audio and video delivery over networks."

Breyer calls Ozzie "one of the most respected individuals in the world in implementing collaboration solutions. Ray simply has a broad set of interests as well as deep expertise that cuts across many of the most important technologies in [the] future."

Ozzie, like Gates, pushes ideas forward until they become market realities. "He has a clear vision of the future that actually comes to fruition," says Peter O'Kelly, research director at tech consultancy Burton Group and a former colleague of Ozzie's at Lotus and Groove. "I know of nobody who has a better track record. The teams that he has assembled in the past have been phenomenally productive. He challenges people and likes to work on very complex challenges. He doesn't do small things."

Officials at Google, IBM, and Oracle had no comment on Gates' announcement. But Sun Chairman Scott McNealy, who relinquished his CEO title to Jonathan Schwartz in April, said in a written statement, "I wish Bill well in his new role, and as I can attest, it doesn't slow down from here. I've been strapped to an airplane seat the last couple months, traveling around the world to talk about issues like education, competitiveness, healthcare and the digital divide."

One observer thinks Gates' plan to put even more of his own time and money into solving world health issues and improving education could rival his accomplishments in the computer industry. "Twenty years from now, we may look back at what he was able to do and be astounded," says Ted Julian, VP of marketing with Application Security, a provider of database security software." Gates is following through on a pledge he made to the Bill & Melinda Gates Foundation and the people it serves. Says Julian, "It's just remarkably impressive."

--With Eric Chabrow, Thomas Claburn, Larry Greenemeier, and Elena Malykhina

About the Author(s)

John Foley

Editor, InformationWeek

John Foley is director, strategic communications, for Oracle Corp. and a former editor of InformationWeek Government.

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