John Waples, Business Editor, Sunday Times

The Company has morphed five times since its inception. Are we getting to a stage now where Microsoft has to morph again and it is time for a structural change?

Bill Gates, Chairman, Microsoft

No. There are two tracks that are somewhat separate. There are technology discontinuities, where we need to bet on something and then there are management structural phases, where the way we organise and do things are different. And those two things are really separate. The latter is much more an internal thing in terms of how we are getting our people to work together, making decisions, etc. Steve has driven all of that for a long time.

I wouldn’t say 80,000 versus 40,000 people is one of those discontinuities. Steve made a lot of changes when he became CEO in terms of the processes and delegation where he and I were making a lot less of the decisions. But I don’t think we are at some boundary. It is up to him. He thinks about those things all the time; I get to think about just the technology discontinuities. It is always a matter of degree but there are always big things happening, such as software running and the internet, natural user interface, advertising models, and the importance of the mobile phone.

John Waples

I suppose the point I am trying to make is does Microsoft all hang together now in one company? Does MSN work alongside Vista? Is there a point at which some of it gets spun out in several businesses?

Bill Gates

No. We’ve done a few spinouts. We have sold Expedia, which became a very successful travel company and that was quite some time ago. We sold Slate magazine, where we were planning on doing what journalism on the internet would look like. Slate did some wonderful things but it came to the point where hiring that kind of talent and keeping it vigorous was not our central skill. We are a software company, so Don Graham at The Washington Post bought that. Actually it has done very well, which I am pleased to see, and it keeps pioneering things. If you want to see cool ways of journalism on the internet I think they are at the cutting edge of that.

In terms of online, email and anything software-centric, that is a core part of the company. We always do reorganisations but what I was saying about the five phases is where we really look at the whole process of how things are reviewed and how the pot people think of their jobs, that is what has changed. Phase one where the top guy writes the majority of the code reviews is not the phase we are in today.

John Waples

You became Chairman and you have become an iconic figure throughout history. Does Steve now step up and fill those more public shoes?

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