VARs: It Was Time For Gates To Step Down

Industry observers said they expect no major impact on the channel and business fronts from the move, since channel-friendly Steve Ballmer remains Microsoft's CEO and Gates will continue as the Redmond, Wash., company's chairman and strategic adviser.

Taking over Gates' chief software architect title is tech guru Ray Ozzie, who was serving as a Microsoft CTO. Craig Mundie, also a Microsoft CTO, was named chief research and strategy officer. Gates said he plans to spend more time on his charity work at the Bill and Melinda Gates Foundation.

"Bill [Gates] has been chief architect, but in reality I don't think you can do that part-time. He has continually been pulled by his foundation interests," said 10-year Microsoft veteran Bob Tedesco, CTO of Resolute, a Bellevue, Wash.-based solution provider. "Everyone is driven by product penetration and the size of the customer base and not by the fact Bill is involved or not involved. Besides, he will still remain chairman."

Observers have been waiting for the day when Gates' succession would begin since he handed off the CEO reigns to his Harvard buddy and designated heir Steve Ballmer in 2000 and began serving as self-appointed chief software architect.

Gates' much-celebrated acquisition of Groove Networks last year spurred industrywide speculation that Groove CEO Ozzie--the creator of Lotus Notes--was Gates' heir apparent on the technology side of the business.

"I was wondering why Microsoft has been piling so much praise in the press about Ray Ozzie over the past several months. They were prepping the world for this announcement," said Todd Swank, director of marketing at Nor-tech, a Burnsville, Minn.-based system builder. "They wanted to make sure everyone knew what capable hands the company was going to be turned over to, along with Steve Ballmer and Craig Mundie."

The Ballmer-Ozzie team will drive Microsoft and its channel partners forward, said Ted Dinsmore, president of Conchango, a New York-based Microsoft solution provider and author of Partnering With Microsoft, CMP Books.

"From a day-to-day perspective, Ballmer leaving [Microsoft] would have a more significant impact on the business, since he has been a centerpiece of Microsoft's business strategy over the past number of years," Dinsmore said. "From a new product perspective, this gives Ozzie great leverage to make his mark and clears the way for innovative technologies. Let's see how Ozzie does now." Plans call for Gates, who co-founded the company 31 years ago, to stop all of his day-to-day Microsoft duties in 2008, a year after the release of the company's next-generation operating system, Windows Vista.

One systems integrator closely affiliated with Microsoft, who requested anonymity, said the timing is right for Gates to pass the chief architect reins to Ozzie.

"There will be some short-term turbulence, but with 2007 more or less in the can as far as initiatives, messages and product launches, it's a good time for the transition," the integrator said. "I think the shock is greater than the impact. The .Net platform was Bill G.'s last real area of influence, and most of the technical direction has been set by the small group of CTOs. The shift to Live has been more Ozzie and Mundie."

Partners said Gates' willingness to pave the way for new ideas and new blood underscores his strengths as a corporate leader and lays the groundwork for Microsoft's transition into a services company.

"This is actually very good for Microsoft, its shareholders and the channel. Microsoft is not Bill Gates but rather a company with its own brand and existence," said Tom Richer, CEO of DevLogics, a Tarrytown, N.Y.-based Microsoft Gold Partner. "I think his departure sends a very loud and reinforcing message to Wall Street that as a blue chip, publicly traded stock, Microsoft is not afraid of change and is its own entity with its own brand."

As the world's richest man and a pioneer of the PC operating systems business, Gates earned his place in U.S. corporate history a long time ago and is now free to embrace new challenges, observers said.

"Gates will easily join the likes of [IBM's] Lou Gerstner and [General Electric's] Jack Welch, who were successful and inspiring leaders that built great companies that are now powerful on their own and are being led to even further growth by others," Richer said.