Microsoft’s Gates says to reduce role in 2008

By Daisuke Wakabayashi

REDMOND, Washington (Reuters) – Microsoft Corp. founder
Bill Gates said on Thursday that over the next two years he
will ease out of a day-to-day role at the company he built into
the world’s biggest software maker.

His decision to step down immediately as chief software
architect and to relinquish all managerial roles in July 2008
comes at a time when Microsoft, whose Windows operating system
runs an estimated 90 percent of the world’s personal computers,
is struggling to find new sources of growth.

Gates, 50, passed the technical mantle to Ray Ozzie, who
joined Microsoft last year and is at the heart of Microsoft’s
push to maintain its dominance by transforming software into
services that generate an ongoing stream of revenue instead of
just a one-time sale.

By July 2008, Gates said, he will be working full-time for
the Bill and Melinda Gates Foundation — which he has funded
with his software billions to promote health and education
projects around the world — but will still be working
“part-time at Microsoft.”

The world’s richest man, whose wealth was estimated at $50
billion in March by Forbes magazine, will remain as Microsoft’s
chairman and an advisor on key development projects past the
2008 transition.

“Obviously, this decision was a very hard one for me to
make,” Gates told a news conference. “The change we’re seeing
today is not a retirement, it’s a reordering of my priorities.”

Few expected the news would affect operations at the
Redmond, Washington-based company, which employs more than
60,000 people worldwide. Gates began taking less of a role when
he handed the chief executive reins to long-time deputy Steve
Ballmer in January 2000.

“Bill Gates may step away from day-to-day responsibility
but he will never, ever step away from Microsoft,” said Anthony
Sabino, professor of business at St. John’s University.

Shares in Microsoft rose 0.9 percent to close at $22.07 on
the Nasdaq, and fell 9 cents in extended trading on the Inet
electronic brokerage after Gates’ announcement.

Microsoft stock, whose stratospheric rise during the 1990s
inspired a generation of tech entrepreneurs, has fallen 13
percent over the past year as investors question its ability to
find new growth markets.

Microsoft has been trying to respond to threats from
companies such as Internet search leader Google Inc. and Apple
Computer Inc., which built a lucrative business around its iPod
digital music player.

The company has also stumbled in releasing the next version
of Windows, delaying its shipping date several times and
cutting out some highly anticipated features.

Its MSN network of online services has struggled to gain
traction against Google and Yahoo Inc., and it has spent
billions of dollars trying to unseat Sony Corp. in the
video-game console market.

“I bet to a certain degree he (Gates) might be getting
tired of beating his head against the wall and trying to find
other profitable revenue streams besides their Windows
operating systems,” said Shannon Reid, manager of Evergreen
Strategic Growth Fund, which owns Microsoft shares.

At the same news conference as Gates, Ballmer, 50, spoke
with his usual confidence and enthusiasm, saying Microsoft
aimed to add another 1 billion customers in the next decade.

“We’re really also announcing the transition we’re making
as a company to reach the next level of success and meet the
needs of a world hungry for new technology,” Ballmer said.

“We will continue his vision of thinking big and executing
even bigger.”

Gates said Ozzie — who created Lotus Notes, which was one
of the first popular corporate e-mail programs and is now sold
by IBM — will replace him as chief software architect. Craig
Mundie, another chief technical officer, will take the new
title of chief research and strategy officer.

Ozzie, 50, joined Microsoft last year as one of three chief
technical officers after it bought his Groove Networks start-up
focusing on collaborative software.

“Certainly, he’s got the experience and respect within the
industry, but he’s not going to be able to take on all Bill
Gates’ roles because as the founder, Bill Gates had a kind of
moral authority that no one else can really take on,” said Matt
Rosoff, an analyst with Directions on Microsoft, an independent
research firm.