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Bill Gates steps aside as chairman, becomes Nadella's consigliore

Gregg Keizer | Feb. 5, 2014
Microsoft co-founder Bill Gates will step down as chairman of the board to spend his time with the company advising the new CEO, Satya Nadella.

According to reports last year, some of Microsoft's biggest investors had called on the board to boot Gates from the chairman's spot. They worried he would prevent the board from making the drastic changes they believed were necessary and handcuff the new CEO to the in-place strategy.

They got their wish, but not in the order they had hoped.

Gates' departure from the chairmanship was inevitable at some point. While he may be an iconic figure from technology's past, he has been regularly selling his Microsoft stock for years. At his current selling pace of approximately 80 million shares annually, Gates will lose his biggest-shareholder spot before June. At that point, Ballmer will become the largest individual investor in the company, holding about 4% of the outstanding shares.

Ballmer will remain on the Microsoft board, the company said.

Gates' new role wasn't completely clear, including how important his opinions will be at Microsoft, but analysts liked the general idea of him hanging around.

"Think about Nadella, he's never run a big company," said Schadler. "He needs coaching from the board and the continuity of the current leadership to be credible. Gates can help him in talking to investors and setting strategy. And by keeping Gates, Nadella keeps Ballmer and the board on his side."

Moorhead disagreed, saying that while Gates was "at his core a product guy," Nadella would turn to Thompson for the kind of coaching Schadler mentioned.

Nor is Gates suitable as Nadella's consumer sidekick, a position that Moorhead said is crucial to the company, which stockpiles billions from sales to enterprises but has whiffed on its consumer strategies. "Nadella will need to be augmented by someone with a lot of consumer experience and success," Moorhead said earlier today.

That's not Gates. "I don't think that Gates is Nadella's right-hand person for consumer," Moorhead said. "I think Microsoft needs someone from outside, an Apple or Google or Samsung, there. Gates was at the helm [as either CEO or chairman] for the things in consumer that Microsoft didn't make traction in."

Moorhead believed that while Microsoft's consumer initiatives — Windows 8, say — were done well, their pace was too slow to reverse the receding tide. That was the main reason why Ballmer was pushed out, according to reports last year that quoted Thompson.

"Gates will be Nadella's consigliore," Moorhead said, using the label for an organized crime boss's counselor. "He'll be Nadella's advice guy. But Thompson is his boss."

For his part, Gates welcomed Nadella to the small family of Microsoft CEOs. "Satya's got the right background to lead the company during this era," Gates said.

Ballmer, too, praised his replacement. "He's a proven leader ... and perhaps more important, almost, is a remarkable ability to see opportunities in the marketplace, to see the landscape, and then to understand how we can collaborate and execute against those here at Microsoft," said Ballmer in a separate video.

"I have absolutely no doubt that Microsoft is in good hands," Ballmer said.

 

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