Geek Goliath: Gates Says G'Bye to Microsoft

June 26, 2008 — -- In the 1970s, no one could have foreseen that a small start-up created by Bill Gates and a team of fellow computer nerds in New Mexico would become the Washington state-based tech behemoth it has become today.

Microsoft — for better or worse, depending on your perspective — set the standard for operating systems in PCs with Windows, bequeathed gamers with the Xbox 360 and the shoot-'em-up trilogy Halo and, in the opinion of some analysts, brought desktop computing to the larger world.

As the company prepares for Gates' departure this Friday, a host of analysts and tech experts waxed practical and philosophical about the future of Microsoft and the legacy of the man behind the curtain.

"I think Bill Gates leaving is on the same level as Steve Jobs leaving [Apple]. He is Microsoft," said Mary Jo Foley, author of the book "Microsoft 2.0: How Microsoft Plans to Stay Relevant in the Post-Gates Era." "He has been the face of Microsoft for 33 years."

Since its start in 1975, Gates has run Microsoft, building it from the ground up and contributing everything from software development to business acumen. Microsoft went public in 1986, with Gates as the CEO and chairman. In 2000, Gates stepped back as CEO, allowing Steve Ballmer to step into that roll. In 2006, the company announced that Gates would transition out of his day-to-day responsibilities as chairman and work more closely with the charitable foundation he started with his wife, Melinda, eight years ago.

With Balmer at the helm and Ray Ozzie as the company's chief software architect, many believe that Microsoft will handle the transition seamlessly.

"Microsoft has had the good fortune of having been run by a founder for a very long time. I don't think they're going to miss Bill," said Silicon Valley-based technology forecaster Paul Saffo. "The big cheese [Ballmer] in charge of the company has been with Bill and Microsoft since the beginning."

Michael Gartenberg, an analyst at Jupiter Research, agreed.

"Microsoft is less dependent over the years on Bill's persona than it was in previous years. Seeds were set since Ballmer took over as CEO. … Microsoft will continue without him, and I think that's ultimately what he was aiming for," Gartenberg said. "This is Bill's company. Bill built and redefined an entire industry. He was challenged by a number of competitors throughout the years and successfully fought off all the challengers, even when naysayers predicted Microsoft's loss of relevance."

But lately those naysayers have been getting louder. The newest version of Windows — Vista — has been widely panned by both consumers and businesses. The company made a failed bid for Yahoo this year to expand in the area of search ads. After rejecting the deal, Yahoo then turned around and struck an ad deal with Google, which was largely seen by analysts as a Silicon Valley slap in the face to the Washington state-based company. Microsoft also faces competition from Google in its bread and butter product — namely Office — as Google and other companies take those word processing and spreadsheet functions off the desktop and online.

And surely you've seen the ubiquitous Apple vs. PC commercials. Could John "P.C." Hodgmen in those ubiquitous Apple ads look any more like a schlumpy exaggeration of Gates?

But don't think that a crumbling empire would pull Gates out of retirement.

"I think he believes he's got everything in place for an orderly transition and he's leaving the company in good hands," author Foley said.

Backlash from Silicon Valley is to be expected, Foley said, but not always heeded.

"It's fun to believe that David can beat Goliath, but the way that you beat Goliath is not by pretending that Goliath isn't the way that he is," she said.

While Foley believes that Microsoft hasn't done a particularly good job of fighting those perceptions of a company that's following instead of leading, she says it would be foolish to count Microsoft out or even on the decline.

"I think they've been really clear where they're going to go in the future. All these reports about [the company] not having a strategy are just from people who haven't done their homework," Foley said. "In the near term, their business model is going to stay what it is. Windows and Office are going to be the cash cows, and that's how they're going to construct the business."

"In the longer term, after, say, three to five years out, they're going to start transitioning to services because that's what [businesses] want," Foley added. "They're going to add some services to Office. They believe this hybrid approach, with software on the client combined with services, are what people are going to want."

Despite any criticism about Vista or the company's strategies, the Microsoft founder is still something of a rock star among computer programmers — one of their own who made it big, became a millionaire and got the girl.

"Gates is to the IT industry what Henry Ford was to the auto industry," said Nik Cubrilovic, co-editor of Silicon Valley blog Tech Crunch and a longtime software developer. "No single person has even come close to reaching the level of influence that he has achieved. Even if you look at the next generation of companies — even Google will never achieve the level of influence that Gates has because he was there at the beginning of the PC industry."

That influence, according to Dan Evans, a senior editor at PC Mag, is an operating system standard that made it easier for developers to bring programs to the masses.

"What he's leaving in his wake is more of a unified software industry. It used to be before Microsoft, there were different OS's. It was hard to write a software that would be on all these different [platforms]," Evans said. "This evolved from Basic to DOS from Windows to dot.net to cloud computing, but it all started with a software industry with a platform that anyone can write to."

But, like many others, Evans thinks that Gates' next move — the management of the Bill & Melinda Gates Foundation, which has a $37.3 billion endowment — could outweigh any of his achievements in the tech world.

"I'm sure if you asked the man on the street what Andrew Carnegie did, how he made his money, they probably wouldn't know. The effects of Carnegie's money are all around us," Evans said. "There will be … bigger and better technology, but the effects of the [Bill & Melinda Gates] foundation will definitely be around."