Goodbye, Bill. Goodbye, Microsoft?

Blaise Zerega argues that to save itself, the software giant needs Bill Gates.

Bill Gates officially removes himself from Microsoft's day-to-day operations today, even as he retains the title of chairman. Taking full responsibility for running the giant software company will be Steve Ballmer, who's been C.E.O. since 2000. Gates' retirement could not come at a more difficult time. (See a timeline of Gates' illustrious history.)

What's the future vision for Microsoft? The company has yet to provide convincing evidence that it "gets" the internet; trying to buy Yahoo has resulted in little more than a media circus.

What else? The company can't seem to get software out on time. The Windows Vista operating system took seven years to develop, allowing Mac OS and Linux to gobble up market share in operating systems, and Firefox and Safari to make gains against Internet Explorer.

Oh, and Microsoft no longer wows Wall Street: Share prices have dropped nearly 50 percent since the end of 1999, even as Ballmer has managed to double revenues.

The biggest challenge: Microsoft appears to be woefully behind on the next technology trend, so-called cloud computing--programs you rent, are accessed over the Web, and don't come from a box from Best Buy and installed on your hard drive at home. It's this new way of computing that has the potential to render Microsoft irrelevant.

To avert this tragedy, Microsoft should take its cue from the events of 1995. That August, after initially dismissing the importance of the still nascent World Wide Web, Microsoft woke up and sprang into action. The company crafted a new product strategy practically overnight and unleashed Internet Explorer 1.0--the equivalent of an ocean liner turning on a dime.

To thrive again, Microsoft must find a way to lead the development of cloud computing. In an era when users will be always connected to the Internet (often through mobile devices) and access programs and data using a Web browser instead of calling them up from a PC's hard drive, Microsoft cannot continue to function as a traditional software company. Sure, the company remains insanely profitable and customers are not going to abandon Word and Excel anytime soon. But if Microsoft doesn't take action before cloud computing arrives, the company could see the majority of that revenue disappear.

So, Microsoft, here's a prescriptive thought: Forget about buying Yahoo. Forget about competing with Google over online advertising. Focus on software. The stuff that made you great. Tighten up the time between releases. Focus on applications that people actually want. Improve quality. And, develop a new product strategy that encompasses the latest Internet developments.

Sound familiar? It's how Microsoft was run in the 1990s. The C.E.O. was none other than Bill Gates.

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