On the face of it, Bill Gates and George W. Bush don't seem to have much in common. One founded a software company, and the other is the leader of the free world. But the two share an embarrassing trait: Both have let some serious talent slip away on their watch.
For Bush, it was his decision to sign off on the Sammy Sosa trade while he was president of the Texas Rangers. To this day his face turns ashen (no, it's not the pretzel scar) whenever a reporter brings it up.
For Gates, it was the loss of Steve Perlman. Perlman, you may remember, was the cocreator of WebTV, the set-top Web browser technology that Microsoft (MSFT), purchased in 1997. More recently he has also been in the news as the man behind Moxi -- the most talked-about technology product of this young year.
As a Microsoftee, Perlman helped lead the company's WebTV unit. But he left in 1999, grumbling that he felt stifled by Redmond's conflicting agendas. "They don't have a culture of innovation at Microsoft," Perlman told me. "I didn't fit in. I'm not interested in being a part of a company where my business agenda conflicts with what I think is the best product."
Not long after Moxi was unveiled at the CES trade show in January, Microsoft reshuffled the team responsible for its Ultimate TV -- the heir to the original WebTV product. Microsoft says the two announcements were unrelated. Nevertheless, the Silicon Valley office of Ultimate TV was shut down, and the team was split into three different internal divisions. "There was a recognition that it's very difficult to be an independent set-top box producer, and we're getting out of that," says Microsoft spokeswoman Erin Brewer. "We're going to focus on software."
That makes sense. Microsoft's strongest suit is obviously its dominant software platform, and in tough economic times, it's not uncommon for companies to perform triage on far-flung units and divisions. "Having a consumer product in the field is a very expensive thing to do," says Forrester principal analyst Josh Bernoff.
But in pursuing its PC-centric vision, Microsoft is missing a greater opportunity, one that it claims it desperately wants: the chance to become a home entertainment hub. Granted, Microsoft launched its new, Windows-powered video game console, the Xbox, late last year. But the game market is already crowded, and Microsoft is still the underdog. If Sony and Nintendo decide to add entertainment-hub features to their machines, they could generate very strong consumer uptake because of the powerful brand loyalty and market share they each command. Microsoft's best bet would be to build its hub dreams around the set-top box -- a young market without a proven leader.
By taking resources away from its set-top box division at a time when the category has been reinvigorated by Moxi (if only through buzz), Microsoft could allow Moxi to establish a lead in this still-nascent market. Microsoft also needs to make sure its attachment to Windows doesn't keep it from achieving its digital-hub ambitions. For the moment, however, it appears as though that's exactly what's happening.