Is Bill Gates next on the Microsoft chopping block?

Three of Microsoft's most powerful investors are pressing the company's board to force Bill Gates to step down as chairman. Are they right -- is it really time for Gates to go?

Reuters says that the three investors, who together hold more than 5 percent of Microsoft's stock, believe that Gates is part of an old guard whose thinking is mired in the past, and who aren't capable of making the big changes that the company needs to face an uncertain future. Reuters reports:

The three investors are concerned that Gates' presence on the board effectively blocks the adoption of new strategies and would limit the power of a new chief executive to make substantial changes. In particular, they point to Gates' role on the special committee searching for Ballmer's successor.

They are also worried that Gates -- who spends most of his time on his philanthropic foundation -- wields power out of proportion to his declining shareholding.

This isn't the first call for Gates to go. Robert Cyran, on the New York Times DealB%k blog, called for Gates to retire. He wrote:

"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...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."

The investors and Cyran are wrong. It's certainly true that many of Microsoft's woes can be traced to Ballmer following Gates' strategies that worked decades ago but no longer work now. Those strategies led to Microsoft losing out in the lucrative mobile and Internet search markets.

But now isn't the time for Gates to go. No one will be better at recruiting the best possible CEO for the company. In addition, having him leave now would send a signal to the world that Microsoft was a chaotic place, unmoored, with no transition between the past and the future. That would make it harder to recruit talented engineers and other employees, and chase away potential partners.

His critics have it wrong that Gates' presence on the board would hamstring a new CEO from implementing major changes at Microsoft. Ballmer was most likely asked to retire, and did not make the decision on his own. The only way that could have happened is with Gates' willing participation. In fact, he could even have been the primary person behind the move.

Asking Ballmer to go means that Gates knows that big changes are needed at Microsoft. He has no ego involved in making sure that things stay the same at Microsoft. He's as much a brilliant businessman as a brilliant technologist, and knows that in the tech world it's change or die.

Certainly at some point Gates should step down as chairman. But now is the wrong time for that.

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