He's Baaack! Bill Gates Shifts Role at Microsoft to Help New CEO

What's This?

Bill Gates smiles during a meeting on Capitol Hill in Washington in December 2013.

Image: J. Scott Applewhite/Associated Press

By Seth Fiegerman2014-02-04 18:02:33 UTC

The most influential person at Microsoft has a new role. No, we're not talking about Satya Nadella's new position as CEO.

Microsoft announced Tuesday that Bill Gates, the company's cofounder and largest shareholder, will step out from his longtime role as chairman and into a new advisory role, with more active involvement in the company and a focus on "supporting Nadella in shaping technology and product direction."

John Thompson, the board member who led the months-long search for a new CEO, will take over as Microsoft chairman.

See also: 5 Things You Should Know About Microsoft's New CEO

"I'm thrilled that Satya has asked me to step up, substantially increasing the time that I spend at the company," Gates says in a video (below) posted by Microsoft. "I'll have over a third of my time available to meet with product groups and it'll be fun to define this next round of products, working together."

The more active role is a striking shift for Gates, who has spent much of his time in recent years dedicated to philanthropic efforts through the Bill & Melinda Gates Foundation, which he runs with his wife. He framed the role change as Nadella's choice, but some top investors were also reportedly pushing to get Gates out of the chairman role to limit his executive power and potential influence over the new CEO.

"What it is practically is freeing the board up to support Nadella with the CEO-level support he needs while not preventing him from driving the ship faster," Ted Schadler, an analyst with Forrester, says of the change in Gates' role.

At the same time, Gates' new role may help Microsoft make a smoother leadership transition. It's always significant when a company names a new CEO, but that's particularly true for Microsoft, which has only had two CEOs in its 38-year history. Like the previous two, Nadella is a longtime Microsoft insider, but he has never run a business himself.

"For Nadella to be successful, he needs to be coached and supported by people that know how to run gigantic public companies and in particular Microsoft," Schadler says. Gates, who was reportedly a strong supporter of Nadella in the CEO search, is well-positioned to help with that. "If Bill G. is going to become a coach, a father figure for Nadella, that can only be a good thing."

Gates is revered for his philanthropic work and early influence on the personal computing market, but his reputation and Microsoft's have become a bit more muddled over the last decade as the company repeatedly came late to major consumer tech trends.

"It seems like Microsoft has always been pushing from behind. They let a trend develop and then they catch up," says Colin Gillis, a senior tech analyst at BGC Partners. "What do we all want out of Bill? We want Bill to bring the technical chops to the table, to talk about where the technology is going and make sure that Microsoft is not late."

"The party line is Bill has an obligation to his foundation, Bill has an obligation to Microsoft. He's best served fulfilling his obligation to Microsoft in that technical role," Gillis added. "I think that's true. The chairman has a lot of overhead.

Even though he may not be chairman anymore, analysts still expect Gates to remain very influential at the company.

"You may not be the chairman anymore, but you are still the founder and you are still the largest shareholder," Gillis says. "And you know who's sitting next to you? Your number two guy [Ballmer], who is the next largest shareholder."

Have something to add to this story? Share it in the comments.

Topics: bill gates, Business, Microsoft, Satya Nadella, Steve Ballmer