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Tuesday, July 21, 1998 - Page updated at 12:00 AM

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Ballmer New President At Microsoft -- Gates Taps Longtime Friend

Seattle Times Business Reporters

Bill Gates named his best friend Steve Ballmer president of Microsoft today, so Gates could get back to developing software.

Gates will remain chairman and chief executive officer, but will formally give Ballmer, 42, day-to-day management responsibilities for the software giant, a job he has been doing for some time.

"If you asked who would run this company, if not Bill Gates, I think the answer most people would give you is Steve Ballmer," said Thomas Hensel, an Everen Securities analyst.

The move also makes Ballmer, formerly executive vice president of sales and support, the point man on Microsoft's most public fronts, such as its antitrust battle with the U.S. Justice Department. He will also handle more of the corporate day-to-day operations.

Gates said today that he has always intended to spend most of his time on product development. He looked at his calendar for the recently ended fiscal year and realized that his development work fell below that threshhold.

"I really want to get in there and work with the developers," Gates said in a telephone conference call. "This is the part of the job that is most fulfilling for me."

Microsoft has been without a president since the resignation of Michael Hallman in 1992. Since his departure, those duties have been performed by an executive committee.

Ballmer's new title formally recognizes the role he has played at Microsoft for some time.

"It officially puts into place Steve Ballmer's role as the person running the day-to-day operations of the company," said Sanjiv Hingorani, an analyst with ING Baring Furman Selz in New York. "I see it pretty much as a natural evolution."

Robert Herbold, executive vice president, will continue as chief operating officer but will report to Ballmer instead of Gates.

Three other key Microsoft executives will report to Ballmer as well: Frank "Pete" Higgings, group vice president of interactive media; Paul Maritz, group vice president of platforms and applications; and William Neukom, senior vice president of law and corporate affairs.

The only executives now reporting to Gates are Ballmer and chief technology officer Nathan Myhrvold.

Microsoft also announced that Ballmer's lieutenant Jeff Raikes will take on new responsibilities as group vice president of sales and support. Raikes, formerly vice president of sales and marketing, will oversee the company's new product support services organization.

Ballmer has long been eyed as Gates' successor. Their friendship dates to 1974, when they were Harvard classmates. Gates has described Ballmer as his best friend.

That longtime relationship has helped to make Ballmer one of a handful of billionaires in the Puget Sound region.

Just as Gates is best known as the visionary responsible for many of Microsoft's key innovations, Ballmer is known as the guy who implements those ideas. Passionate about Microsoft and its products, Ballmer's personality is at the core of Microsoft's competitiveness.

In the 1980s, he played hardball with IBM in early fights over computer operating systems that Microsoft won. Today, he is the key strategist in the battle with Netscape over Internet browsers.

The Ballmer-Gates association first clicked when the two math fanatics met at Harvard in Gates' sophomore year. Equally enthusiastic about sports, Ballmer was student manager of Harvard's football team. He was a big man on campus, in contrast to the less social Gates.

Sometimes he gets carried away. That's what happened, he says, when he blasted Attorney General Janet Reno in a speech days after the Justice Department's antitrust filing.

If bundling Microsoft's browser, Internet Explorer, with Windows 95 was good for customers, he said, that was reason enough to do it. When the audience of business software vendors roared with approval, Ballmer said, "Then I say the heck with Janet Reno on this point."

Ballmer acknowledges he may have overstepped in his comment.

"It was not as bad in context, and I really meant no disrespect," he said. "But I regret the utterance."

His choice as point man for the antitrust investigations strikes many in Washington as interesting given his reputation for bulldog business tactics. Ballmer frequently has been quoted in documents included in the Justice Department's antitrust investigation.

Few believe Gates will fully remove himself from key decisions regarding the antitrust case.

Seattle Times staff reporters Paul Andrews and James V. Grimaldi contributed to this report.

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Steve Ballmer at Microsoft

-- 1980: Hired by Bill Gates as operations manager; helps company purchase DOS, the basis for MS-DOS, from Seattle Computer Products. -- 1981: Over Gates' reservations, increases hiring, doing many interviews himself. -- 1984: Marshals Microsoft's development of Windows, which is behind schedule and buggy. -- 1987: Begins custodianship of increasingly touchy IBM relationship, focusing on OS/2, a future competitor of Windows. -- 1989: Purchases 945,000 shares of Microsoft stock at an average of $48.91 per share. -- 1991: Asks J. Allard, new Microsoft hire, to put technology in Microsoft's networking products to make them Internet-compatible. -- 1991: Loses voice on trip to Japan, requiring surgical repair of his vocal cords. -- 1992: Named head of worldwide sales and marketing by Gates. -- 1993: Becomes Microsoft's third billionaire. -- 1994: Forges Microsoft expansion in corporate networking with Windows NT. -- 1997: Begins push for Digital Nervous System, a strategy for using Microsoft products to build electronic commerce over the Internet. -- 1998: Calls Microsoft's biggest challenge maintaining an "urgency to drive ahead." Success, he warns, can produce a sense of complacency.

Copyright (c) 1998 Seattle Times Company, All Rights Reserved.

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