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Saturday, June 28, 2008

Ballmer and Gates bid farewell with tears

On his final full day at Microsoft Corp., Bill Gates went on stage to reminisce with his longtime friend Steve Ballmer, and neither man could hold back tears as Ballmer handed Gates a large scrapbook as a farewell present.

Gates, who is stepping back to focus on his philanthropy, sat with CEO Ballmer in a Microsoft conference room and meandered through moments in Microsoft's history. They stopped to get in a few good digs at IBM Corp., whose first personal computers were loaded with Microsoft's DOS operating system before IBM adopted its own operating software and their relations strained.

The day Bill Gates didn’t call me a communist
This one is for Bill Gates.
He was 27 when I first met him. It was 1983 and he was in New York hustling a new laptop (the Radio Shack TRS-80 Model 100) that came with Microsoft software in ROM. I remember him rocking back and forth, as if to contain his impatience, when asked if there was an UNDO key.

In those days, before Microsoft became a software colossus, he or Steve Ballmer would stop by my office every once in a while to talk about their plans for the company. Later I would see another side of him through the Bill and Melinda Gates Foundation.

But the Bill Gates I remember best is the one I spent two uncomfortable hours with in 1995, in the early days of his antitrust problems. We were in his Redmond office with Dave Jackson, then Time Magazine’s San Francisco bureau chief, conducting what was supposed to be the final interview for a Time cover story (Master of the Universe).

It was not going well. And it reached a low point when, in my memory, the chairman of Microsoft called me a communist. Later, reading the transcript, I realized he didn’t really say that — although he was pretty feisty. To my editors’ credit, they printed the juiciest parts of the interview — including a brief mention of Apple (AAPL) — as a sidebar to the cover.

In honor of Gates’ last days at Microsoft (MSFT), it’s pasted below:


Bill Gates displayed his well-known combativeness last month when TIME questioned him about Microsoft’s controversial business practices. These are excerpts from a two-hour interview with TIME technology editor Philip Elmer-DeWitt and San Francisco bureau chief David S. Jackson

TIME: Are you betting the company on Windows 95?

Gates: I don’t know what “bet the company” means. We’re a company with $4 billion in the bank. I don’t think we’ll disappear. We’re not like Time Warner, with $15 billion in debt. But if you had to take one thing in the next year and say what will our biggest impact on the PC industry be, it would clearly be Windows 95. Windows 95 is a very, very big deal.

TIME: Have you won over all the easy computer customers? Is it going to be harder now to convert the nonusers?

Gates: Well, 20 years ago, when we started, we talked about a computer on every desk and in every home. Now, if you take that to its extreme and say 100% of the people, clearly we’ll never get there. There’ll always be some people who choose not to participate, just like some people don’t use the phone or watch TV.

I see it as a continuum. That is, as more multimedia titles come out, as more information is online, as we make these things easier to use, we start to draw in more and more people. Now, once you get in for one application, the hurdle to learn a second one is fairly low. My dad wanted to do his taxes automatically. Then I got him doing word processing and now electronic mail because everybody in our family is connected.

TIME: Do you spend much time on the Internet?

Gates: Well, I spend a few hours a week just seeing the new stuff that’s out there. If you count E-mail, I’m on the Internet all day, every day.

TIME: We’d like to ask you about some of the charges that have come out in court.

Gates: This is old, old stuff.

TIME: We’d like to have it on the record, if you wouldn’t mind.

Gates: Are you, like, a historical publication or a newsmagazine?

TIME: Just last January, according to Apple, you threatened to stop developing for the Macintosh. Is this true?

Gates: We at no time, in any way, have ever threatened to stop developing for the Macintosh. I don’t even understand what it would mean. It’s the most bizarre thing in the world. What would we get out of that? It’s a big revenue source. It’s a profitable business.

TIME: Borland [another Microsoft competitor] charges that you used vaporware [the preannouncement of a nonexistent product] to screw up the development of Turbo BASIC. Which you did, right?

Gates: No! If you’re accusing me of competition, then yes. You have to decide. Are we optimized to help competitors, or are we optimized to help customers? Should we be open about our plans?

Do you understand what is being said here? The question is, are you allowed to tell people what your products are in advance?

TIME: Isn’t the point that if you’re a small player and you pre-announce a product, it has no effect, but that when a large player preannounces, it can freeze out the competition?

Gates: I’d say that’s pretty nonsensical. Let’s say you take a market, like the cigarette market, and you ban advertising. Who benefits?

TIME: The manufacturer with the largest installed base.

Gates: Installed market share, totally. So let’s have an absolute ban. You may never talk about new products in advance. But people do talk about their plans. You know, it’s this damn free-speech thing. It’s well established that communications is valuable for the efficiency of marketplaces. That’s all procompetitive stuff. This assumes that you like capitalism.

TIME: We don’t live under free, unfettered capitalism. Isn’t that why we have antitrust laws?

Gates: When did antitrust come up in the discussion? Antitrust is the way that the government promotes markets when there are market failures. It has nothing to do with the idea of free information.

TIME: I guess in Judge [Stanley] Sporkin’s mind it does. He’s saying vaporware is an issue.

Gates: You have to laugh. I mean, this is a judge who goes off and intentionally reads a book [a biography critical of Gates called Hard Drive] in advance and asks about some of it. It’s minor. I mean, you’re either here to talk to me about Microsoft or talk to me about that stuff. This lawsuit has nothing to do with Microsoft. Nothing.

TIME: Are we supposed to ignore the fact that there is a complaint that has Microsoft’s name on it?

Gates: There are probably 60 cases with Microsoft’s name on them. There will be at all times. Period.

TIME: Have you given much thought to succession?

Gates: I have a will written that, you know, talks about how the company should be run and who should vote my shares. There’s nobody designated as my successor.

TIME: How long do you plan to run Microsoft?

Gates: Well, I’m 39, and my response to that question has always been that for the next decade I plan on playing pretty much the role I am today.

TIME: You always answer one decade?

Gates: Yeah, that’s as far ahead as I can see.


Ballmer: And Then There Was One
As Bill Gates leaves Microsoft behind, Steve Ballmer and the team he has put in place have plenty of challenges to overcome.

This is Bill Gates' last official day as a Microsoft employee, though as the company's largest shareholder, he remains the company's chairman. To underline his exit, Gates gave an emotional goodbye speech to employees Friday morning that was Webcast across the globe.

However, his departure leaves more than one burning question.

Despite all of the years of careful planning for this day and what comes after, can the management team that's left to run the company keep it moving forwards – and some would say, continue innovating -- instead of drifting into oblivion the way so many other tech firms have failed after the founder has left?

Don't forget that, after both companies foundered, Apple (NASDAQ: AAPL) and Dell (NASDAQ: DELL) had to recall their founders in order to save the companies they'd built.

That puts the focus on CEO Steve Ballmer and the team of executives he's assembled.

It won't be easy, but several Microsoft (NASDAQ: MSFT) observers think both Ballmer and the company's other key leaders are up to the job.

"Ballmer has been managing this era already … Gates stepped out of the day-to-day [running of the company] at the turn of the century," Rob Enderle, principal analyst at the Enderle Group, told

Ballmer, after all, Enderle pointed out, has been CEO for the last eight years. Many of the major decisions that have impacted the company, its partners and customers since 2000 have emanated from his office.

During that time, the company's revenues grew from $23 billion per year to an expected $60 billion in fiscal 2008, which ends Monday. The company has also grown in size until today Microsoft employs nearly 80,000 people worldwide.

Like Gates, Ballmer is 52. They met during their sophomore year at Harvard. Gates dropped out to start Microsoft, while Ballmer graduated and started on an MBA at Stanford before Gates hired him in 1980.

Since then, Ballmer has held a wide range of executive positions -- including vice president of operating systems -- many of them with a marketing focus, although they also required a technical understanding of the company's products,

"Ballmer may not be a technologist, the way Gates is, but he understands the product set," Charles King, principal analyst at Pund-IT, told

Still, largely because Gates has been so visible throughout the company's history, many people have the impression that Gates' vision drives Microsoft and Ballmer is merely the company's chief salesman.

While there might be some truth to that argument – Ballmer is a consummate salesman -- analysts this week repeatedly said that attitude doesn't properly give credit where it's due. Ballmer, during his 28 years with Microsoft, has been closely involved with the company's technologies and the decisions around them, even if he hasn't done code reviews the way Gates has.

Additionally, Gates has said that he will continue to work as much as a day a week for the company as special projects for Ballmer, although he hasn't named any so far.

"I think it would be really wrong to say that Gates' oversight will not be there," Tim Bajarin, president of Creative Strategies, told "Bill and Steve have worked together for so long that Steve knows Bill's thinking," he added.

Besides that, Gates was smart enough to appoint Ray Ozzie, the creator of Lotus Notes, to replace him as the company's visionary and chief software architect.

"By hiring people like Ozzie, I think they have the technology [visionary] side covered," King said.

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