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As Bill Gates prepares to walk away from Microsoft, both the man and the company he founded will face challenges getting along without each other, according to the new issue of Newsweek magazine.

Gates, who is stepping down from his full-time role at Microsoft this week to focus on his $37 billion charitable foundation, is the subject of an article that profiles Microsoft's successes and failures during his tenure, as well as the difficult transition the company and its founder will likely face. (CNET News.com plans to publish its own retrospective on Gates' departure, but in the meantime, you might want to refresh yourself with some stories from when the transition was announced.)

We will likely be seeing more of Bill Gates with people such as U2 front man Bono (like in this video), working on famine relief and education.

(Credit: Corinne Schulze/CNET News.com)

While the Newsweek story mentions Microsoft's challenges in antitrust probes, Windows Vista versus Windows XP, and the Internet search arena, the story also offers intimate perspectives from the people who know him the best, as well as Gates himself.

"He's not just Bill Gates, he's the Bill Gates," Steve Ballmer, Microsoft's CEO and Gates' right-hand man for decades:

He founded the company, he's accumulated this wealth, he's got this foundation, he's got this fame. That's irreplaceable. Also, Bill grew up with every one of the technologies in this company. He's got more capacity to remember things than anybody I've ever known. It's unlikely we'll have anybody again who has that breadth.

Gates was also responsible for stoking the fires of urgency at the software giant, said Ray Ozzie, who took over Gates' job as chief software architect:

A lot of the company's strength is that Bill created a culture of crisis--if there weren't a Google, we'd have to make one. This is a period of unprecedented strength for the company. If there had to be a time when Bill transitioned out, we couldn't have set it up better than it is right now.

Paul Allen, who co-founded the company with Gates, remarked from the perspective of his own departure from the company in 1983:

You don't always realize how dramatic that transition is going to be when people aren't depending on your decisions day by day.

So how about Bill? Is he going to miss being in the trenches, slugging it out with Apple, Google, and Mozilla? It doesn't sound like it from what he told the magazine:

This whole thing about which operating system somebody uses is a pretty silly thing versus issues involving starvation or death.

With Bill Gates just days away from his semi-retirement from Microsoft, look for a tidal wave of reminiscences and glossy magazine spreads.

Yes, we do indeed have our own in the works; more on that in a sec. But one of the first to arrive is Fortune magazine's package, "Microsoft Without Gates," published online Friday.

Even after he steps down from his day-to-day role at Microsoft, Bill Gates still plans to do some heavy lifting--for the company, for the Gates Foundation, and in his own personal pursuits.

(Credit: Corinne Schulze/CNET News.com)

Fortune, known for its rankings of the rich and the companies they've built up, lauds the 52-year-old who former Microsoftie Nathan Myhrvold describes as "one of the greatest business minds of all time" and lays out how "Bill Gates 2.0" will divide his time among three offices, at Microsoft, at the Gates Foundation, and at a personal workspace.

It also tells how as a teen he got his hands on a used Teletype machine to hone his mainframe programming skills.

One unfinished-business tidbit is worth noting in light of Microsoft's failure to acquire all or a portion of Yahoo.

The one concrete commitment Gates has made to (CEO Steve) Ballmer, other than continuing to chair board meetings, is that he will keep working with the search and advertising team. He's promised he'll spend two and a half hours on it each week.

Fortune also talks about how the company plans to revive a reputation that's been singed by a number of factors, not least of them Apple's ongoing Mac vs. Vista ad campaign, as it heads toward the Windows 7 era.

The new marketing campaign, which is supposed to run for three years beginning later this year, is an urgent attempt at triage for both Windows and the larger Microsoft brand. The expensive, aggressive, long-overdue rejoinder to Apple will be unprecedented at the company in its scope...

...In the next 18 months Microsoft will launch three separate "Windows" products, more or less in tandem. Aside from the flagship Windows 7, which will succeed Vista for PCs, the company will launch a new version of Windows Mobile as well as a new version of the services known as Windows Live. For the first time, they're going to be promoted as aspects of the same thing.

As noted, CNET News.com next week will have its own package looking at Bill Gates' accomplishments, and at what lies ahead both for the man and for Microsoft. As I write this, News.com's Ina Fried is in Redmond after some face time with the Microsoft chairman, and she promises she'll have some good stories to share.

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.

Bill Gates and Steve Ballmer share the stage at D6 on Tuesday with Walt Mossberg and Kara Swisher.

(Credit: Dan Farber/CNET News.com)

Tonight at the D6 conference in Carlsbad, Calif., Microsoft CEO Steve Ballmer and Chairman Bill Gates will take the stage together. The dual interview, to be presided over by The Wall Street Journal's Walt Mossberg, will be, in part, an exit interview. Gates is stepping down from his full-time role at Microsoft (corrected: he will remain as chairman of the board) in July. We will also get an early demo of Windows 7. As Dan Farber reports, we'll see a little bit of the interface, which promises to be very shiny. I'm hoping that we go a bit deeper than that: that there's news about robustness, open architecture, and maybe even the object-oriented file system we were supposed to have in Vista.

Here's the liveblog:

Click here for full coverage of the D: All Things Digital conference.

Nowadays, it seems like if there's a big scientific problem, like how to send explorers back to the moon or build a robotic vehicle, organizations put several million dollars on the line and wait for private industry to invent the solution.

The Bill & Melinda Gates Foundation is taking a similar approach to fight global health problems, in a first-ever initiative called the Grand Challenges Explorations. On Monday, the foundation said it would put up $100 million to fund novel ideas, vaccines, or drug-delivery systems that protect people against infectious diseases.

Of course, the foundation already funds global-health projects. But it says that this initiative is different because it involves a faster grant-making process. People can apply online with a two-page application, without providing preliminary data about their proposed research. And the foundation will be looking at proposals from scientists who don't typically work in global health, including people from Africa, Asia, and other parts of the developing world.

It is accepting proposals online through May 30, 2008.

Northern Virginia Technology Council chairman John Lee greets Microsoft Chairman Bill Gates after he talked up the future of software before about 1,100 members and guests of the business group.

(Credit: Anne Broache/CNET News.com)

Editor's note: This story was updated at 3:40 p.m. PDT to add more on Gates' and Mundies' policy talk.

WASHINGTON--It's not always easy persuading politicians on Capitol Hill to take up items on Silicon Valley's wish list, even if you're Bill Gates and his posse.

That was one message that the Microsoft chairman and Chief Research and Strategy Officer Craig Mundie had on Thursday for the some 1,100 local business and government representatives gathered at a breakfast here sponsored by the Northern Virginia Technology Council. (NVTC's board includes companies like IBM, Micron, Unisys, AOL, Sprint Nextel, and, of course, Microsoft.)

Gates spent most of his hourlong appearance at the event behind a podium in a cavernous hotel ballroom, waxing optimistic about the future of software and hardware. He gave what has become a familiar set of predictions about the increasing digitization of analog things ("smart" white boards in offices, physical desktops that are touch-sensitive computers in themselves, a la Microsoft's Surface tabletop PC) and the rising importance of software in everything from health care to three-dimensional simulations to education.

It was during a question-and-answer session with the audience (in which, for the record, no members of the media were allowed to participate) that Gates and Mundie, seated side by side on the stage, opened up a bit about the dynamics of trying to get their wide-ranging priorities noticed by policy setters.

"Historically, the United States has done a great job of doing the right investments," Gates said. The concern going forward, he said, is whether politicians will be willing to make the "trade-offs" necessary to keep the nation ahead of other countries in the high-tech realm.

For example, it may be more attractive in the short term for politicians to hand out income tax rebates, but they mustn't neglect choices that could support long-term economic growth, such as upping federal grants for research and development and increasing the number of visas for skilled foreign workers, Gates said.

But Mundie, for one, said he sometimes finds that action on Silicon Valley priorities can be a tough sell, as politicians have a tendency to respond, "The polls won't let us do that."

Congress: 'Skewed to the short term'
Members of representative democracy are supposed to know how to balance those competing goals, but Congress's decisions are "too skewed to the short term right now," Mundie said.

Both executives were responding to a question from Rep. Jim Moran (D-Va.), who was present in the event's audience, about the "political context" the Microsoft co-founder and his cohorts have been finding during their in-person meetings with congressional leaders this week.

Gates was on Capitol Hill Wednesday morning speaking to a House of Representatives committee about the need for three major areas of action: increasing the number of H-1B temporary visas and green-card permanent visas that are allotted to high-tech workers; increasing investments in federal research programs; and focusing on ways to improve the educational system, particularly in the math and science fields.

Afterward, he spoke to the Democratic caucus. He also dined with congressional leaders on Tuesday night. All in all, the experience has been what Moran called a "barnstorming tour" of both chambers of Congress.

Gates, echoing his public remarks in Congress Wednesday, said that raising visa caps is the "hot issue of the moment" for his company. Microsoft and others argue that there aren't enough qualified workers to fill highly technical engineering roles at their companies and that a shortage of work visas could stymie their ability to compete with foreign companies. The request, however, is controversial--groups representing American computer programmers argue that a larger number of visas will depress wages and displace American workers.

"I'm still optimistic about the U.S. doing the right thing," Gates said.

White spaces for wireless broadband
In response to an audience member's question, Gates and Mundie also touched briefly on another policy issue that's dear to Microsoft's business: freeing up vacant TV channels--known as "white spaces" in FCC speak--for use as a wireless broadband pipe. Companies like his hope that delivery method could eventually compete with cable and DSL offerings and lead to lower prices and more choices for consumers.

The white spaces are considered ideal for deploying wireless broadband services because its signals can travel long distances and through obstacles--or, as Mundie put it, "the last hope to get some good spectrum." (Microsoft isn't the only company with that view--Google, Dell, Intel, and HP are also interested.)

The plan, however, faces serious resistance from TV broadcasters, who argue that allowing unlicensed devices to roam on that spectrum will cause serious interference to their signals. So far, the FCC hasn't made a decision on what to do about the small swath of unused channels, although it is currently testing prototype devices for interference concerns.

Gates, for his part, said he's "hopeful" that regulators will decide in the tech industry's favor.

Microsoft Chairman Bill Gates urged Congress to commit to increased visa caps and greater investments in research and education during an appearance before the U.S. House of Representatives Science and Technlogy Committee.

(Credit: Anne Broache/CNET News.com)

WASHINGTON--For the second year in a row, Microsoft Chairman Bill Gates ventured to Capitol Hill and urged Congress to let more foreign-born engineers work in the United States and to direct larger numbers of tax dollars to research and education.

Just as he did around the same time last year before a U.S. Senate committee, Gates on Wednesday contended America's competitiveness in the global economy is "at risk." He said Congress, the administration, and the next president must commit to overhauling immigration policy and encouraging both public and private research investment.

"It makes no sense to educate people in our universities, often subsidized by U.S. taxpayers, and then insist they return home," he told the House of Representatives Science and Technology Committee during a two-hour hearing.

The hearing was convened, and Gates invited, to mark the committee's 50th anniversary. The occasion alone foreshadowed an exchange of pleasantries that consumed most of the event.

For example, Committee Chairman Bart Gordon (D-Tenn.) requested advice, from one father of a 7-year-old daughter to another, about what sort of hardware and software might help her adapt to the new world. (Gates, for the record, gave a whimsical endorsement of the Internet's power to answer all those questions that his parents would have had to leave unanswered back in the day.)

And Republican Ranking Member Ralph Hall (R-Texas), who posed a number of questions about skills needed by engineers in the tech space, made Gates a practically unheard-of concession: "You can take any or all of those (questions) or none of them."

Members of the House Science and Technology Committee listen to Bill Gates' advice on getting children more interested in those fields.

(Credit: Anne Broache/CNET News.com)

One notable exception to the friendly reception, however, came when Rep. Dana Rohrabacher (R-Calif.) used his five allotted minutes to grill Gates on the merits of visa cap increases. "Will it not hurt those countries and will it also not depress wages for people in our own country?" the congressman asked.

"No," the Microsoft chairman responded sharply. "These top people are going to be hired. It's just a question of where."

Rohrabacher said he's not talking about "top" students. He's concerned about the B and C American students who "fought for our country and kept it free." There's no excuse, he argued, for displacing those people with "A students from India."

An audibly irritated Gates replied that when companies like Microsoft hire top foreign engineers, they create jobs for B and C American students around them. If Microsoft weren't able to hire those top engineers in the United States, it'd be doing so in other countries and surrounding them with native B and C students, he said.

Rohrabacher argued that if companies like Microsoft simply raised wages, they'd find plenty of Americans lining up for those jobs.

"No, it's not an issue of raising wages," Gates retorted. "These jobs are very, very high paying jobs."

Earlier in his remarks, Gates said Microsoft was unable to hire one-third of the foreign-born candidates it wished to hire because of too few H-1B visas. In an attempt to show a shortage of qualified Americans to fill his company's posts, he pointed to a 2008 National Science Foundation study that found in 2005, 59 percent of all doctoral degrees and 43 percent of all higher-education degrees in engineering and science are awarded to temporary residents.

Gates also suggested the U.S. government's stance toward high-skilled foreigners is absurd in comparison with other countries. He pointed out Microsoft's decision last year to open an outpost just over the Canadian border from Washington as a sort of refuge for foreign-born employees for whom it couldn't obtain U.S. visas.

Rohrabacher's badgering isn't just talk: He has sponsored a bill that would require employers to prove they're not displacing American workers and fulfill other obligations before obtaining H-1Bs, as have two U.S. senators.

Such efforts enjoy support from groups representing American computer programmers, such as the Programmers Guild, which continue to argue that the worker shortages described by Gates and other high-tech executives in recent years are bogus.

Ron Hira, a public policy professor at the Rochester Institute of Technology and author of the book Outsourcing America, told CNET News.com on Wednesday that it's wrong for Gates to imply that most H-1Bs are going to the brightest foreigners with advanced degrees and earning them big bucks. According to U.S. Citizenship and Immigration Services, the typical H-1B holder holds a bachelor's degree and is making a median salary of $50,000. And the same NSF report referenced by Gates says less than 1 percent of H-1B recipients in computer-related professions even hold doctoral degrees, and about 44 percent hold master's degrees.

Still, politicians with a skeptical view of visa expansion appear to be largely the exception in Congress. Other members from both political parties at Wednesday's hearing suggested Gates' push for a more liberal immigration policy was right on.

Whether those long-sought changes will occur this year remains unclear. Attempts to overhaul the immigration system collapsed last year, and with them went efforts to hike the number of H-1B visas and green cards.

To be fair, Gates emphasized that changes in immigration alone aren't enough. He repeatedly called for improvements in training American teachers and students in science and technology fields at all levels, from kindergartens to universities.

Few in Congress seem to disagree with Gates' push for greater investments in research and education. Last year, the president signed a measure called the America Competes Act into law, which calls for pouring some $33.6 billion into a bevy of federal science, technology and research programs. Members of the Science Committee said they would be pressuring appropriations committees to ensure the target funding amounts are fulfilled in the final budget.

Throughout the hearing, Gates repeatedly received praise for his work through the Bill and Melinda Gates Foundation. But at least one member, Rep. Laura Richardson (D-Calif.), who represents what she called the "challenging communities" of Watts, Compton, and Long Beach, clearly wanted Gates to be even more generous. She pressed the billionaire philanthropist to commit to sponsoring more scholarships with guaranteed jobs at companies like his waiting after a university degree is obtained.

Gates said he agrees scholarships are important, but he wasn't willing to go as far as Richardson had wished.

"There's just no shortage of jobs being offered to those top students in computer science," he said. "They are highly sought after."

You knew this was going to happen eventually--Bill Gates prepares to step away from full-time work at Microsoft and suddenly he is on the slippery slope to the poor house.

Google this!

(Credit: Dan Farber)

Well, maybe not the poor house, but he has lost his position as the world's richest man, a title he'd held since 1995. The new world's richest man is Gates' friend and investment mogul Warren Buffett, according to Forbes magazine's annual ranking of the world's wealthiest people, which was released Wednesday. The magazine estimated Buffett's worth at $62 billion, and Gates' fortune not too far behind at $58 billion. But that doesn't mean he only slipped one notch: Carlos Slim, a Mexican telecoms tycoon, came in second with an estimated worth of $60 billion.

Buffett, who runs a holding company whose stock price closed up Wednesday at $139,000 per share, announced in 2006 that he would give away the lion's share of his fortune to the Bill & Melinda Gates Foundation. At that time his personal fortune was valued at $44 billion. In the past year, Microsoft's stock price has seen fluctuations but is pretty much in the same place it was 12 months ago, while Berkshire Hathaway's stock price has increased more than 25 percent.

Gates plans to step away from full-time work at the software giant in July to focus on his charitable foundation.

There were rumblings last year that Gates' hold on the top spot might be slipping when various media reports estimated Slim's net worth at $67 billion.

Practicing what he preaches: Bill Gates joins U2 front man Bono and PC maven Michael Dell in Davos to pitch Vista-based PCs from Dell's namesake company. For every one of the computers purchased, Dell and Microsoft will make a contribution to The Global Fund to help in the fight against AIDS in Africa.

(Credit: Microsoft)

At the World Economic Forum in Davos, Switzerland, on Thursday, Microsoft co-founder Bill Gates told the corporate and governmental bigwigs in attendance that businesses should adopt a form of "creative capitalism" in which they seek to alleviate the problems in developing nations.

The notion is essentially this: coming up with drugs or water purification techniques for those nations may not be as profitable as catering to well-heeled retirees in Florida, but rewards will come nonetheless, in the form of recognition and, ultimately, a profit.

"Sometimes market forces fail to make an impact in developing countries not because there's no demand, or even because money is lacking, but because we don't spend enough time studying the needs and requirements of that market," Gates said.

Bah, says CNET News.com's chief political correspondent, Declan McCullagh. Encouraging companies to give to charities, enter smaller markets, or assign top employees to tackle intractable problems in far-flung regions--where those companies may not even have business--conflicts with the duties owed to shareholders. Besides, the shareholders can donate to charities on their own that they might prefer.

See "Gates misses the point on 'creative capitalism'."

Editor at Large Michael Kanellos, meanwhile, says corporations have broader powers. If participating in projects in Africa can help recruit or retain employees, or even open up new markets, it's a good idea.

See "On 'creative capitalism,' Gates gets it."

What do you think?