Bill Gates’ Big Challenge at Microsoft: Rewriting the Bill Gates Legacy

Tuesday’s biggest news about the future of Microsoft is unquestionably the appointment of longtime company executive Satya Nadella as CEO, replacing Steve Ballmer. But the most intriguing aspect of the succession plan is the part about the guy who’s signing up to be Nadella’s technology adviser: Bill Gates. It’s a new role for Microsoft’s cofounder, who is turning over his chairmanship of the company to former Symantec CEO John Thompson.

In a video welcoming Nadella as CEO, Gates says that he’ll be available to spend more than a third of his time consulting on Microsoft products, the most he’s devoted to the business since he stepped down as chief software architect in July 2008 to focus on his philanthropic efforts. If there was ever such a thing as a post-Gates era at Microsoft, it’s over.

Does Nadella want Bill Gates peering over his shoulder and chiming in on product design, or would he prefer to run the show on his own? We’ll never know for sure, but it’s hard to imagine Gates — one of the industry’s great visionaries and strategists — getting more involved with the company and not leaving his own distinctive imprint.

Still, everybody agrees that the Microsoft of the future must be a different company than the Microsoft of today, or the Microsoft of yesterday. Including Microsoft: In his final months as CEO, Ballmer was awfully busy shaking things up. He instituted a “One Microsoft” reorg designed to smash the company’s historic fiefdoms. He also declared that the company was henceforth focused on “devices and services,” and fast-forwarded the devices part by agreeing to buy Nokia’s phone business.

The only reason that Ballmer has been trying to engineer a new Microsoft is that the old one — the one which has been a continuation of Gates’s Microsoft — is in dire need of fundamental reimagining. The news isn’t bad on all fronts: If it were, the company wouldn’t have reported robust Q2 financial results. But the company that dominated personal computing for decades doesn’t dominate smartphones, tablets or any emerging category of devices.

And chances are that the era of Microsoft dominance is over forever — even if more people come around to liking Windows 8 and Windows Phone.

In the 1990s, Microsoft was able to turn Windows’ popularity into a near-monopoly on desktop operating systems, web browsers and office suites, which left it in charge of the entire computing ecosystem. The company saw everything as an extension of Windows, a form of tunnelvision that largely worked in its favor.

Until it didn’t:

* In the old days, the applications you wanted to run were available for Windows, and sometimes only Windows. Today, the web is the great overarching platform, and it works equally well on a Windows PC, a Mac or a Chromebook.

* Microsoft’s tendency to see everything as Windows led to Windows Mobile, an operating system with a tiny Start button that became a dinosaur the moment the iPhone was announced. That mindset is still visible today in Windows 8: Microsoft intends it to work equally well on everything from old-school desktop PCs to 7″ tablets. If that goal is attainable at all, Microsoft hasn’t achieved it yet.

* Classic Microsoft products often tried to make everybody happy by cramming in every possible feature, leading to bloat. Today, a lot of products succeed by doing a few things, and doing them well.

* In its golden age, Microsoft was brilliant at identifying important product categories — PCs, Net-enabled TVs, tablets, phones and more — but often failed to turn them into polished products. That didn’t matter so much in the era when it controlled the entire personal-computing ecosystem, but it does today. (And to be fair, the level of craftsmanship of many current Microsoft products is far better than in the past.)

* Microsoft’s principal source of revenue has always been software sales. But that business model is under attack — most notably by Google, which gives away operating systems and web-based apps, then makes money off them via advertising.

If Gates is going to help get Microsoft moving rapidly in the right direction, it won’t be because he helps it be more like the Microsoft of old, the one he built in the first place. It’ll be because he helps it become something new. Something without many of the characteristics which spring to mind when one thinks about Bill Gates’ historic worldview and areas of expertise.

(Not all of them, though. If Gates tells you which product categories he thinks will matter in ten to fifteen years, listen carefully — his track record on that stuff is uncanny.)

I suspect that Gates will be something of a silent partner — he doesn’t need the fame, and it wouldn’t be good for anybody if people perceived Nadella as a junior partner or a puppet. But it would be fascinating if part of the cure for Microsoft’s difficulties moving past the Gates legacy turned out to be a larger dose of Bill Gates.