Is it time for Bill Gates to retire as Microsoft chairman?

A prominent columnist argues that Bill Gates should follow Steve Ballmer out the door at Microsoft and retire as the company's chairman. Is it really time for Gates to go, or would his leaving seriously harm Microsoft?

On the New York Times DealB%k blog, Robert Cyran, a columnist for Reuters Breakingviews, argues that it's time for Gates to go. Here's the core of his argument:

"Allowing Microsoft to buy Nokia's smartphone business as he exits will saddle Mr. Ballmer's successor with a flawed strategy. Mr. Gates, the company's founder and chairman, bears some responsibility for this and other missteps. With less than 5 percent of the shares -- scarcely more than Mr. Ballmer owns -- Mr. Gates matters more to his charitable foundation than to Microsoft these days."

He goes on to say that:

"Under his leadership, Microsoft’s board left Mr. Ballmer in place too long. Now that Mr. Ballmer is to retire as chief executive within a year, Mr. Gates doesn’t have a replacement ready, an important task for any chairman.

"The board let Mr. Ballmer waste money by chasing consumer markets and hardware, with the company’s online services business losing $12 billion over the last three years alone. Directors also just sanctioned the purchase of Nokia’s smartphone operations for $7.2 billion, locking Mr. Ballmer’s successor into manufacturing devices -- hardly a Microsoft strength these days."

Cyran argues that Gates' foundation takes up far more of his time energy than does being chairman of Microsoft's board. And he concludes:

"Mr. Ballmer’s belated departure offers Mr. Gates a window of opportunity. The world might be better off with his full attention on the foundation -- and so would Microsoft's investors."

Cyran is right that Gates bears a great deal of responsibility for Microsoft's current woes. I've written before that Ballmer has largely followed Gates's strategies since Gates left as CEO, and that has hurt Microsoft. Under Gates, Microsoft has a smartphone operating system years before the release of the iPhone, and a tablet years before the iPad, yet Microsoft was unable to cash in on them. Gates recognized back in 1995 the importance of the Internet, and wrote a memo to company employees saying, "The Internet is the most important single development to come along since the IBM PC was introduced in 1981." But he didn't act on that, because he was too focused on Windows. Google came along and has dominated search ever since.

Gates also developed Microsoft's playbook of using Windows as a bludgeon to beat competitors into submission, and gain share in related markets, such as browsers and offices suites. It worked until Microsoft was taken to court by the U.S. Justice Department. Microsoft still adheres to that strategy, and it has cost the company dearly. It's largely the reason Microsoft lost out in the mobile and Internet markets.

And Gates undoubtably let Ballmer stay at Microsoft too long. Ballmer should have been let go years ago.

Still, despite all that, now is not the time for Gates to leave as chairman. The transition from Steve Ballmer to the next CEO is going to be difficult enough; having Gates leave the company could leave it in chaos, and have partners, the rest of the tech industry, and company employees uncertain about Microsoft's future. That would make it more difficult for Microsoft to attract and retain top-notch employees and to make deals with other companies.

It would also make it harder for Microsoft to attract a CEO for those reasons. And there's no doubt that Gates would do a better job of courting and attracting potential candidates than anyone else on the planet.

Beyond that, Gates may no longer be involved in the day-to-day decisions at Microsoft, but there's no arguing with his brilliance. His mastery of understanding the nexus between technology and business is still unmatched. Microsoft needs his acument right now.

So no, it's not time for Gates to go. He is certainly capable of running his foundation while being chairman of Microsoft's board. His leaving now would be a big blow to Microsoft.

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