This summer, after 30 years at the helm of Microsoft, Bill Gates (pictured) will finally take retirement. But can he let go and can Microsoft afford to let him go?
Halfway through a concert, Irish rock star Bono goes backstage to take a call from one of the world’s most powerful individuals. He mutters the F-word before whining: “We’re full up in the band. We can’t just replace Edge because you got a high score on Guitar Hero, Bill.”
Moments later, US presidential hopeful Hilary Clinton is similarly exasperated: “I’m not looking for a running mate, Bill. I’m not sure politics is really you.”
These are excerpts from a video doing the rounds about the looming retirement this June of the world’s richest man, Bill Gates, where he and other powerful individuals perform a send-up of what Gates is likely to do upon retirement.
While the focus is on how Gates might spend his time, the real question is how Microsoft will perform following the departure of a figurehead who has been with the company from day one.
Gates, who plans to dedicate his time to philanthropic endeavours through the Bill and Melinda Gates Foundation, leaves Microsoft at a time when, arguably, it has never been more powerful yet never more vulnerable.
The company, which is credited with creating 12,000 millionaires, has outgrown its humble origins in the operating systems market to become a software, internet, hardware, media and gaming industry giant with 2007 revenues of $51.1bn and profits of $14bn. Gates himself has an estimated personal fortune of $59bn.
Despite this, Microsoft, which employs 1,200 people in Ireland, is facing competition from the rise of the open source software industry. It is also battling to stay relevant in an internet advertising market dominated by Google; has launched a $42bn hostile takeover attempt on Yahoo!; and in recent weeks was hit with an €899m fine from the European Commission for anti-competitive behaviour.
“Microsoft is a dramatically different company from the one brought to task back in 2004 by the European Commission,” says Ovum analyst, David Mitchell. “It is no longer the Windows and Office company and no longer behaves like that. It could be argued the intervention of the European Commission brought about those changes in behaviour but the reality is that this served as no more than a re-enforcement of a wake-up call Microsoft was already hearing from around the global markets.
“It already understood that its continued expansion was going to be reliant on changing many aspects of its business and had already moved to do this. It’s broad-ranging interoperability announcements in recent weeks are further testament to that change in spirit,” Mitchell said.
Microsoft was founded in 1975 by Harvard dropout Gates and his friend Paul Allen to develop and sell BASIC interpreters for the Altair 8800 computer. Five years later, it created the breakthrough MS-DOS operating system as part of a project with IBM. The rest is history.
For the past 30 years, Gates has acted as chief software architect at Microsoft, guiding its technological vision. And, despite the nerdy appearance, he is a hard-nosed businessman who is responsible for Microsoft’s dominance in the computing world and its reputation for anti-competitive tactics.
The company’s Office software is ubiquitous in the world of business and it intends to repeat this success with its SharePoint collaboration and document management technology, which it aims to place in the hands of executives everywhere.
At a SharePoint conference in Seattle earlier this week, Gates was candid about the change retirement will bring. “This year is a transition year for me. I’m moving from full-time Microsoft and part-time on the foundation to full-time on the foundation. I’ve been doing software full-time since I was 17. This will be an interesting change for me.
“The transition is going very well with Ray Ozzie and Bob Muglia stepping up [as software architect and technical officer] and I’m still going to be involved in projects like the natural interface.” The natural interface Gates refers to is computing beyond the keyboard and mouse that involves touch, vision and sound.
The push behind SharePoint, you can tell, will occupy Gates right up to his departure. It is clear that it is an extension of his vision of where Microsoft will go. “SharePoint is based on a vision of letting workers share information in a better way. It is the next evolution in what we started with Microsoft Office.
“Served by software, executives will be better informed to make quicker decisions and collaborate,” he says of a platform that pulls together information from a firm’s accounts into blogs and wikis, and webpages which executives can create themselves.
“All of this would have been impossible 10 years ago but it’s now growing at a fantastic rate. For a company with offices in many locations with partners and employees, empowerment used to be very difficult. Today, there’s nothing that should hold you back, not even geography. Having access to people over the internet is straightforward.
“These improvements come from the miracle of the computer chip, which in keeping with Moore’s Law sees the number of transistors on it double every two years. That’s the wave we’ve ridden and will continue to do so in the future as we think more ambitiously about ways to mine data,” Gates said.
Businesses today take it for granted that new employees know how to use Office and that they can just send one another PowerPoint presentations. Gates wants to see a business world where information sharing tools like SharePoint are just as commonplace. This vision may be closer than many believe.
“There are one billion PCs in the world and 500 million of these use licensed Microsoft Office software – the rest use it but aren’t licensed,” said Gates. “SharePoint has already achieved 100 million licenses and is worth $1bn in revenues to Microsoft.”
For all that Gates is a master of seeing his strategies realised, even he cannot ignore potential usurpers like Google – a company that is only 10 years old but has already stolen a march in the online advertising world and is pushing out productivity software to rival Microsoft.
Gates was actually quite dismissive and scathing of the Google threat. “Google doesn’t really understand the special needs of business. Their entire economic model is based on the consumer space. We’re interested in challenging them, but Google’s productivity tools don’t have the richness or responsiveness needed.
“For most of Google’s products, the day they announce them is their best day.
“Look at Google Talk – it was so going to change the world. It’s healthy there are choices, but in terms of the breadth of what needs to be done, are people using [Google productivity tools] for budgeting or sales analysis? Users want to be empowered to be able to use productivity tools across a wide range of possibilities.”
Gates was asked how Microsoft’s attempts to take over Yahoo! with an offer currently valued at $42bn would affect Microsoft’s SharePoint strategy.
“Whether we do the Yahoo! merger or not will have no impact on SharePoint. We are serious about competing in consumer search. We learned a lot in terms of how you build up and automate data centres as we hosted SharePoint but also a lot about customer management.
“The fact that we are serious about competing in the search space is relevant and will help SharePoint. Search is an important area for us. In general, we are bullish about search,” Gates said.
Kurt DelBene, senior vice-president of Microsoft’s Office division, said three quarters of Fortune 100 companies are now using SharePoint and that there has been a 77pc growth in the number of partner solutions available from the 2,000 partner firms.
Gates said he is excited about pursuing charity work with his and his wife’s foundation, which has tended to focus on global problems ignored by governments and other organisations, including AIDS research and providing college funds for under-represented minorities.
“We have causes we believe in and global health is a big priority,” Gates said of his plans.
Asked which presidential candidate he’s likely to back, he demurred. “I’m not making any public comment on that yet.”
Irish firm at the business end of Microsoft spearhead
Microsoft is aiming to emulate the success of its Office suite over the past decade with its web collaboration and document management technology, SharePoint.
So far, some 100 million licences have been bought by 16,000 companies – 20pc of these in Europe. It is one of the company’s fastest-growing product lines and has already brought in $1bn in revenues.
Dublin content management software company pTools has aligned itself with the Microsoft SharePoint strategy and was in Seattle this week at the sold-out SharePoint conference 2008.
PTools managing director, Tom Skinner, says at least two county councils in Ireland have deployed his company’s technology alongside the SharePoint system
PTools’ technology allows the re-use of content across multiple sites and enables workflow across enterprises.
“The Microsoft SharePoint conference in Seattle is a major event and the list of companies exhibiting is impressive. We will use this opportunity as planned – to build upon previous software releases and continue to grow the pTools partner channel.”
By John Kennedy