General

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Chapter 15

Ballmer's Microsoft

How CEO Steve Ballmer is remaking the company that Bill Gates built

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There isn't another company in the world as closely identified with its leader as Microsoft Corp. (MSFT ) has been with William H. Gates III. When the PC revolution erupted in the mid-1980s, it was Gates who emerged as chief pitchman for the clunky machines that suddenly appeared on many desktops. When tech stocks soared to unimaginable heights, Gates's multibillions landed him atop the lists of the world's wealthiest. And when Microsoft found itself in the crosshairs of federal antitrust regulators, Gates personified the abuse of market power. He was lord over a software behemoth that in 27 years has racked up nearly $50 billion in profits and that calls the tune for one of the world's most crucial industries. Gates is to our era what Rockefeller and Carnegie were to theirs.

But Gates no longer runs Microsoft. He gave up the chief executive role 2 1/2 years ago to his best friend and longtime management sidekick, Steven A. Ballmer. The burly, eats-nails-for-breakfast Detroit native thrives on the discipline of organizational management the way Gates thrills to the intricacies of technology. In 2000, Gates gave his pal free rein to restructure the way Microsoft manages finance, sales, product development, marketing, even strategic planning. And Ballmer took him up on it, big time.

Today, after a transition that had its rocky moments, it's clear that a new era has dawned at Microsoft: The powerhouse that Gates built is being reconstructed by Ballmer. And Gates doesn't seem to mind. Ask Gates about Ballmer's thumbprint on the company, and he laughs at the understatement. "Thumbprint? He's got big thumbs," Gates says. "Steve's the No. 1 guy, and I'm the No. 2 guy....I have a strong voice, a strong recommendation, but Steve has to decide."

Indeed, if Gates is Rockefeller, then Ballmer is shaping up to be Microsoft's Jack Welch--not a...