• The New York Times, Monday, July 30, 2007 10:46 AM

Microsoft is in the midst of the greatest change/challenge in its history, and yet the company's main man still intends to step down. Co-founder Bill Gates is a year into a planned two-year transition, which will ultimately see Craig Mundie, Microsoft head of research and strategy, and software architect Ray Ozzie, take his place. But Gates is carefully planning the futures of both his $33 billion foundation, which he will eventually devote most of his energy to, and the company he founded 32 years ago, laying out a decade-long plan for Microsoft during its second quarter earnings call last week.

Should Gates walk away at such a delicate time? He and his successors say now is the "perfect juncture" for his departure, the first stage of which has been "reasonably seamless." In fact, they say the greatest danger would be Gates remaining Microsoft's Chief Decision Maker from a distance. In this day and age, being "up to speed" is essential, says Ozzie. "Did you see the 20 announcements last week that Google did, Yahoo did, Cisco did?" he asks, referring to some of Microsoft's biggest competitors.

Gates points out that the company's future, now challenged by the Google, Yahoo and other big Web services/advertising players, still belongs to software. "Why do you like your iPod, your iPhone, your Xbox 360, your Google Search?" he asks. "It's the software that goes into it."

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