Challenges await for Microsoft after Bill Gates

June 24th, 2008 - 12:09 pm ICT by IANS  

San Francisco, June 24 (DPA) Thirty-three years after he founded what has grown to become the richest and most powerful tech company in the world, Microsoft’s Bill Gates Friday is relinquishing control of his baby to concentrate on philanthropy. Gates will give up his full time role at Microsoft and his title as executive chairman. But he will retain the title of chairman and plans to work for Microsoft one day a week.

But though Microsoft can boast of unparalleled earnings and profits, its future is open to doubt as a gaggle of new competitors takes aim at its dominance.

These challenges are of course nothing new. Ever since Microsoft unseated IBM as the tech company to beat in the late 1980s, its detractors have been waiting for a young, new upstart to make Microsoft the new IBM. But Microsoft has seen off challenge after challenge, from Netscape to AOL and from Yahoo to Linux.

The big question is whether without Gates in control the company will survive an assault by what is likely its strongest challenger ever - the meteoric money-making machine known as Google.

Ironically it was just such a competitor that Gates identified when he issued his 1995 clarion call to turn the Microsoft battleship to face what he called the “internet tidal wave.”

Gates foresaw that as the net developed it was possible that the operating system and desktop computer programmes that are the company’s bread and butter would become secondary to web applications that would be run over the network.

Ever since, the company has used its massive profits from Windows and Office to subsidize a massive, but unprofitable effort to extend its dominance to the web.

However it has consistently failed to take a leading role in any of the emerging technologies that have come to define the Internet experience: social networking, Web 2.0, the mobile internet, broadband, 3G and utility computing.

Those failed efforts culminated in the aborted recent attempt to buy Yahoo.

Now Google is challenging Microsoft on its own turf with a set of free online applications that bypass the need for operating systems and expensive productivity suites.

It has also been a major backer of the Firefox open source browser, which in its four years of existence has already taken 18 percent market share from Microsoft’s Internet Explorer.

Microsoft and Gates insist that they have the management team in place, led by Gates’ long-time college buddy Steve Ballmer, to allow the company to meet these challenges without the guiding hand of its founder.

“We will continue his tradition of thinking big and executing even bigger. Of hiring the best and the brightest and letting them do their best work; and of setting the standard of great software that really improves people’s lives around the world,” the company said in a statement.

But there are many who disagree. “No-one speaks Microsoft, lives Microsoft, embodies Microsoft as Bill Gates does,” said Charlene Li, from consultants Forrester Research. “What they’re going to lose is that founding focus, and the ability to rally the troops.”

But Rob Helm of the research company Directions on Microsoft believes the new team has plenty going for it.

“The company is in a better place than most people realize,” he said.

For all the talk of web applications large businesses still have few alternatives to Windows and Office, he points out.

“I’ve seen the company bat away one mortal threat after another - and I see no reason to believe that Google’s turn will not come too,” he said. In five years “Microsoft will be in the same place as now - with dominant businesses that no-one has an alternative to.”

As for the impact Gates’ departure will have on Microsoft’s culture, Helm believes it will be minimal.

“Bill has been there so long he has lots of ‘Baby Bills’ that represent the same culture: very smart, very aggressive and focused on meeting competition head on.”

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