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Bill Gates Programs New Life as Donor

The world's richest man will yield the reins of Microsoft to focus on global charity efforts.

June 16, 2006|Chris Gaither and Terril Yue Jones | Times Staff Writers

Microsoft Corp. Chairman Bill Gates said Thursday that he would begin relinquishing day-to-day oversight of the software giant he co-founded and steered to dominance to devote more energy to philanthropy.

In so doing, the man who became the archetype of the late-20th century mogul appeared intent on solidifying his legacy in the manner of tycoons from another era. Names such as Carnegie, Getty and Rockefeller are associated less today with the industries they led and more with the good works their fortunes enabled.

Over the next two years, Gates will transfer responsibility to newly promoted executives as he shifts his attention to the Bill & Melinda Gates Foundation, the charitable endowment he established with his wife in 1994.

"When you're the richest guy in the world, how do you measure your success?" asked technology writer Mark Stephens, who goes by the pen name Robert X. Cringely. "A Nobel Peace Prize. He's told friends privately that's his goal."

Gates, 50, will remain chairman of the company he built into a software powerhouse through a combination of being present at the birth of the industry, smart marketing and tough tactics. The company's Windows operating system is installed in the overwhelming majority of the world's personal computers and its Office productivity suite enjoys unchallenged dominance.

That success made Gates the wealthiest man in the world, with a current fortune estimated at $50 billion.

In recent years, though, his attention has focused increasingly on the Gates Foundation, which has spent more than $10 billion on campaigns to reform education and fight AIDS and malaria. The foundation has an endowment surpassing $29 billion and its spending rivals that of the World Health Organization.

The announcement of Gates' transition comes as Redmond, Wash.-based Microsoft struggles to regain its competitive footing. The importance of its PC-based software is waning in the face of new online applications. Microsoft's position at the center of the computing universe is under heavy attack from Internet companies such as Google Inc. and Yahoo Inc.

Gates began surrendering responsibility at Microsoft in 2000, when he elevated Steve Ballmer to chief executive during the height of the company's antitrust battle with the Justice Department. During that fight, Gates frequently was reviled as a ruthless monopolist. Promoting Ballmer was seen in part as a way to put a gentler public face on Microsoft.

Thursday's move, though, signals much deeper change, said Mark Stahlman, a technology strategist at Hedgerow Partners.

"This is a reflection of the fact that Gates is no longer able to wrap his own personality and understanding around the changes that have already occurred in the industry," he said. "He was taken out of the leadership by the antitrust case and has been relying on other people. And in that time, the importance of what he's said he wanted to do -- give away his fortune -- has gained momentum."

The planned departure clears room for new blood at the top of Microsoft.

Gates' current role as software and technical guru will be assumed by Ray Ozzie, creator of the Lotus Notes program, who joined Microsoft when it acquired his start-up, Groove Networks, last year. Chief Technical Officer Craig Mundie will become chief research and strategy officer, and General Counsel Brad Smith will oversee intellectual property and technology policy.

"Today was, in some sense, not about Bill Gates at all, but rather the promotion of other people to leading technology and strategy positions," Stahlman said.

But other observers said the fact that Microsoft drafted three executives to fill Gates' shoes underscored how much influence Gates wields at Microsoft, which he founded with Paul Allen in 1975 after dropping out of Harvard University. Allen is now a well-known technology investor and sports team owner.

"A lot of companies don't come down to an individual, but in a large way Microsoft does," said Michael Cohen, director of research for Pacific American Securities. "I think he's somewhat replaceable as a technologist but irreplaceable as a business strategist. If Gates is still chairman and at the company part time, I think they will still be able to benefit from his genius of marrying business strategy with technology."

Gates said Microsoft was stocked with talented engineers and managers, and observers had been overly focused on his contributions to the company.

The change will give Gates more time to focus on his role as perhaps the world's most influential philanthropist through the foundation, which he financed with Microsoft stock. He and his wife have traveled the world, visiting crowded slums in India and remote villages in Africa.

"For a long time, he's said that to give away money intelligently takes as much work as it does to get the money," said Greg DeMichillie, an analyst at Directions on Microsoft, an independent research firm in Kirkland, Wash. "It seems natural that he would switch to the foundation."

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