One hapless serf made a tragic mistake at a Microsoft company meeting last fall. He pulled out an iPhone in front of CEO Steve Ballmer. According to observers, Ballmer freaked out. The chief grabbed the iPhone, placed it on the ground, and pretended to stomp on it. This was typical Ballmer, whose notions of company loyalty were honed in his hometown of Detroit, where everyone drove Fords. Ballmer doesn't let his children jam to iPods or use Google to search the Web. Microsoft recently decided to reimburse workers only when they use Windows-based phones. According to The Wall Street Journal, about 10% of Microsoft employees carry iPhones anyway, but they hide them in ugly cases, like concealing a comic book in a newspaper.
Ballmer's insecurity about his employees' iPhones suggests a larger myopia. His Microsoft seems rudderless, without any real goals other than to react fretfully to whatever Google and Apple do in categories they already dominate. Remember when Microsoft was the fearless Death Star, the gravitational force that determined the direction of everything else in tech? Those days are long gone. Ballmer took over as CEO in 2000, as Bill Gates began his long departure from the firm. It hasn't been a happy decade. While Google and Apple reached stratospheric heights, Microsoft careened from one disappointment to the next. Think of Ballmer's on-again, off-again effort to woo Yahoo, the worst romantic comedy ever (How to Lose Your Credibility in 10 Months). Or his continued investment in the Zune, the Washington Generals of handheld entertainment. While Ballmer kept his eyes on rivals, the company's cash cow endured the ignominy of an embarrassing Vista launch. Can you think of any other tech firm where the CEO could bungle the company's main product and still keep his job?
Solving Microsoft's problems won't be easy. But here's one way to start: Bring back Bill Gates. This idea might strike you as absurd, given that Gates has moved on to saving the world, which is far more important than saving Microsoft. But don't discount the value of saving the software giant. Despite its recent troubles, Microsoft remains enormous, wealthy, and home to some of the smartest workers on the planet. It could once again become an engine for innovation in the industry — if only it found a leader committed to a singular vision for its future. Ballmer, clearly, is not that leader. There are few people in tech who dream as big as Bill Gates — and no one who has proved more capable of making big ideas happen.
Consider Microsoft's founding mission: "A computer on every desk and in every home, all running Microsoft software." Gates set this goal back in 1975, when it wasn't clear that most people would even encounter a computer in their lives, let alone see any need to buy one. To be sure, Microsoft has never been on the forefront of tech innovation; it took its best ideas — the graphical OS, the office suite, the Web browser — from other companies. As a result, many Gates detractors argue that we'd all be running PCs anyway, even if Microsoft had never stepped in. But I'm not so sure. The PC as envisioned by Microsoft — ugly, cheap, everywhere — is very different from the one envisioned by Steve Jobs (stylish, expensive, proprietary). Had Jobs won that fight, some of us would have pretty computers while the rest of us might have none.
Today, this same philosophical battle is being waged over mobile gadgets, the next great frontier in computers. As in the early 1980s, Apple is setting the standard, but its strategy — focusing on a proprietary high end — will leave out the masses. There's an obvious opportunity for big thinking, for a company to push a revolutionary, cheap, run-everywhere mobile OS for cell phones, tablets, and the smorgasbord of appliance-like machines that are coming down the pike. But Microsoft has been criminally absent from this game. Last February, more than three years after Jobs unveiled the iPhone, Ballmer finally introduced a completely redesigned Windows Phone, but he may already be too late. In Microsoft's absence, Google has emerged as Apple's main mobile competitor.
Gates would never have let such an opportunity slip. When presented with the threat of the Internet in the '90s, he moved mountains to crush Netscape. Some of his actions weren't very admirable; indeed, there was never a lot to like about Bill Gates the businessman. But at least you can say this: He knew how to win. And he could do it again.
A version of this article appeared in the June 2010 issue of Fast Company magazine.