Gates-Ballmer rifts marked Microsoft power shift

Bill Gates and Steve Ballmer have been close friends and business partners for nearly 30 years. But the two sometimes clashed over the sharing of power at Microsoft, particularly before Ballmer's rise to the CEO slot.

The sparring became so intense that at one point, board members intervened to iron out differences, according to a detailed, behind-the-scenes look at the men Thursday in The Wall Street Journal. The power struggle may have also undermined product strategies and slowed decision making on key issues.

The story forms a backdrop to Gates' planned transition out of day-to-day management at Microsoft, beginning June 27.

Reporter Rob Guth reveals that, despite Gates' decision to hand over the chief executive title to Ballmer in 2000, he sought to retain his power within the company. As Guth writes:

Things became so bitter that, on one occasion, Mr. Gates stormed out of a meeting in a huff after a shouting match in which Mr. Ballmer jumped to the defense of several colleagues, according to an individual present at the time. After the exchange, Mr. Ballmer seemed "remorseful," the person said.

In meetings involving the two men, Gates "still held sway that wasn't tied to a title...Mr. Gates would interject with sarcasm, undermining Mr. Ballmer in front of other executives, Mr. Gates and other Microsoft executives say," according to the report.

Gates and Ballmer share the stage at the D6 conference last week.

(Credit: Dan Farber/CNET News.com)

Gates gradually came to accept his role as No. 2 at the company. "I had to change," Gates said, according to the report.

Now, as Gates' departure is imminent, Ballmer will have free reign. "I'm not going to need him for anything. That's the principle. Use him, yes, need him, no," Ballmer told the Journal.

Last week, the two men shared the stage at the D6 conference to reminisce about Microsoft's beginnings and to discuss future products, such as Windows 7, the successor to Windows Vista.

While the behind-the-scenes anecdotes make for compelling reading, perhaps the more revealing sections of the story deal with internal struggles over key product development efforts.

One, for instance, involves an internal effort to build an online application suite in 2000, called NetDocs, long before Google and other competitors began offering Internet-based rivals to Microsoft's Office franchise (longtime readers of CNET News.com will recall that we wrote some of the first stories about the NetDocs effort in 2000). According to Guth:

In one case, two vice presidents clashed over the future of NetDocs, a promising effort to offer software programs such as word processing over the Internet. The issue: because NetDocs risked cannibalizing sales of Microsoft's cash cow Office programs, some executives wanted NetDocs killed. Messrs. Gates and Ballmer were unable to settle on a plan. First, NetDocs ballooned to a 400-person staff, then it got folded into the Office group in early 2001, where it died.

Now, as Microsoft continues to struggle with its transition to an online-advertising and product strategy, Gates is staying largely on the sidelines, letting Ballmer and other executives call the shots. Guth highlights the now-aborted bid for Yahoo as evidence that the transfer of power is nearly complete.

Gates promises to leave those matters to Ballmer and will not return full-time to the company. "I am done with that," he told the Journal.

[cincytee]

> Now, as Gates' departure is imminent, Ballmer will have free reign.

"free rein" -- it's a horse analogy.

[sebrooks]

With those two egos in the same room, it is surprising that the sprinklers didn?t go off. What they should have done was settle matters like ?gentlemen? and duel it out. Let the two go at it with pistols, maybe knives or even nail guns at ten paces. Gates will remain ?largely? on the sidelines about as well as Ballmer will quietly call the shots. Have you ever heard Ballmer quietly do anything? He is about as diminutive as Bill Gates? checkbook balance. At least there is only one pompous dictator running Apple, when Jobs finally abends or aborts, maybe there will not be so much drama. Geeks and success just do not mix well.

[knute6]

Dumb and Dummer have managed to build a monopoly that's great at keeping other software makers products off the shelfs and out of sight. Look at Apple a robust innovative machine that makes Microsoft and it's 15 different operating systems look like a band of morons. Whatever Dumb and Dummer can do Apple can do better and simpler. KISS Keep It Simple Stupid

[rcardona2k]

We've been living in the Bizarro Matrix that started around 1984. Only now is Apple unplugging itself and taking the red pill to free the minds of millions of PC users.

[gljerik]

You are the one who has been fooled. You are drinking from the well of Apple coolaid, and you don't even realize it. Why is it so difficult for you to believe that there is something in this universe other than Apple, and God forbid, there are other good companies out there. You are the reason why Apple will forever be stuck where they are. Nobody likes fanboys, and we stay away from Apple products because of people like you.

[kmomrik]

Ironically enough, I believe you mean "Dumb and DUMBER". 'Dumb', I would surmise, would refer to as Bill Gates - one of the richest men in the world who didn't even graduate from college and who donates millions to charities and funds. 'Dumber' (or Dummer) would then most likely be Ballmer. On the second, I can't comment, because I don't know that much about him. Perhaps, just maybe, I'm not sure but MAYBE they're pretty smart...because, oh, I don't know... they run one of the most (questionably) successful corporations in history. Yes, Apple fans and other various MS antagonists will say that they're only successful through shady means... If a bank robber has billions because he is very good and hasn't been caught, then he is a successful bank robber. If a corporation makes BILLIONS of dollars (WITH competition, unlike Exxon and Shell and BP), maybe, just maybe they're doing SOMETHING right.

[baisa]

If DUMBER had been running Amazon, the executive who suggested the Amazon Marketplace (alternative new and used booksellers) would probably have been fired. "WHAT???? You are suggesting that we actually sponsor our own competitors and compete against our own products??? GET OUT YOU MORON YOU ARE FIRED!"

If there were a measurement of Competence*Company-size then DUMBER would probably still rate lower than a 4 year-old kid selling sour lemonade in the middle of Antarctica in winter. DUMBER is the most incompetent large company CEO that I can think of -- present or past. Last time I read, more Microsoft divisions lose money than make money. The BILLIONS in shareholder wealth that have been wasted by DUMBER's testosterone-fueled "we'll bury them!" endeavors in areas in which MS has no particular expertise is just appalling. And let's not even talk about Vistanic...

[xcopy]

I'm loath to defend MS or anyone associated with the company.

In fairness to Balmer though, it's not all his fault. MS has been a victim of it's own success and the reason MS has trouble releasing new products that work (Vista; and yes, I'm a user) and that people actually want (unlike Office 2007 which if awful) is because it has eliminated all it's sources of innovation and intelligence.

MS has survived and prospered by stealing ideas and buying smaller companies, not by it's own merit. The end result when the food supply is gone is not pretty and that's what we see now. these guys are now bereft of "good" ideas and we the consumer will pay the price.

OK, so Balmer never has to worry about a job after MS because there are many bridges that need a troll and he's the perfect candidate and Gates never needs to have a single thought or earn another dollar again.

Let's be fair to these guys though and consider the alternative..Can anyone really say that the alternative to MS would be desirable? Can you imagine a world where that smarmy megalomaniac Jobs ruled, and we all had to put up with macs and more distasteful iSheep? Personally, I'll take Balmer the ugly troll instead...

[gabeheim]

xcopy, what about a healthy industry that also included linux based solutions (with support from OEMs), or other OS's that have come out and been technically equivalent or superior to windows? Remember MS's restrictive OEM agreements of the 90's that destroyed the crucial OEM market? Why must it be Sauron or Saruman? If we had a robust market, we would have: A more viable consumer linux solution, perhaps even other OS's such as beos or startups that will make consumer friendly BSD's (not OS X), a friendlier apple, and a better windows. We would have a better java with a better UI (since SUN would not have to spend the 90's and early part of this decade fighting off MS's attempts to sabotage and then steal Java. So, I don't think it would have been a decision between a troll and a egotistical overlord.

[gabeheim]

That's right, it is very smart to create a large corporation that requires > 90% of the market to remain profitable. That feels threatened every time a new and innovative company comes along. Microhoo would have been the most stupid merger in history (tell me now, how many multibillion dollar mergers have succeeded recently?), yet ballmer, unless he is trying to sabotage yahoo (wait till the FTC and SEC get into that...) by loading the stock price, asserted that a merger was necessary to compete with google. Why does MS have to take over the web advertising anyways?

Gates was a good businessman in many regards, but he failed in others. I don't think popular media will see that until MS unravels itself. BTW, giving to charity does not justify his means. BTW, does it help africa if you send some money for AIDS when at the same time you are trying to monopolize their growing IT infrastructure? A technology industry that might be able to gain a strong competitive core that could improve the livelihood of many people in africa? One that might be able to develop more industries with more open technologies? Sorry, I fail to see how that is justified. I cannot respect gates and co until they can recognize that 1) windows is not for everyone 2) MS is not GOD! and 3) Learn to live with the freakin' rest of the world, not take over it!

[Sumatra-Bosch]

IT is cruel to innocently stupid people to call Ballmer dumber. He is proudly and premeditatedly imbecilic. He could probably run a fruit stand with guidance or run the brownie division of Duncan Hines. CEO? Nah. He could probably ride the monopoly Gates' father and mother help him set up for a whiile but he'd eventually bankrupt even that. Anyone heard the story about him head-butting a bus that he thought cut him off?

[benjaminstraight]

Free reign?