Exit Interview with Microsoft's E&D Chief (Continued)

Q: Best memory over the past 22 years?

Bach: Oh, wow.

Q: It's got to be Xbox, right? The Xbox launch.

Bach: Well, it depends on -- the best memory is hard to quantify because it depends on what you want to talk about. I mean, I have some amazing memories, I have some funny memories, and then I have some things that were personally really enjoyable. So, they're all a little bit different. You know, I go back and my -- small things, I had five managers in my first four weeks at the company. So, it's sort of a classic startup thing where I literally had five managers. So, I think about that --

Q: One after the other.

Bach: Right. Literally I had one for one day. Bruce Jacobsen was my manager for my first day at Microsoft, and then he moved to LAN Manager. So, I think about that and I chuckle and laugh.

You know, I think often of John Nielsen, who was really my first manager for a period of time, and I still see him, and Lewis Levin, and I do think about it, and that's an emotional memory, not a -- you know, it's not a highlight or even a lowlight, it's just an emotional memory. He was the guy who really -- I interviewed with him for an hour and 15 minutes, one of the best interviews I had when I was interviewing, a lot of fun, and I loved working for him. So, that's sort of a personal memory.

Then I think funny things like I'm probably then only guy at Microsoft who's been on tour with Bill (Gates) and lost him twice on tours in strange cities, and had to look around to try to find the CEO of Microsoft. (Laughter.) This goes back a long time in history. This was back before there was security and a whole bunch of other things. But I was late to the airport to pick him up once. You know, I have funny things like that I remember. And then there's moments with Bill, you know, onstage with Slash at CES, his last CES presentation. I mean, to me that was certainly enjoyable and quite personal.

So, I have all kinds of different memories, and they're hard to like sort of put on a scale and dimensionalize in any given way.

If you want to talk about business success, being part -- and I literally was just a cog -- but being a part of the creation of Office and being a little bit more of a leader in the creation of Xbox, I mean, clearly those are two personal highlights for me. Just from a pure business perspective those would be the two things I would highlight.

Q: What are your thoughts about Microsoft going forward? Where do you see this company headed, and how do you feel about its prospects?

Bach: Well, you know, I certainly feel great about the company's prospects.

Q: It's kind of a setup question, because you're not going to sit here and --

Bach: No, but look, you look a the product cycle we have going right now, and it's a pretty amazing product cycle. I mean, you look at what's going on with Windows, you look at what's going on with Office, you look at what's going on with Internet Explorer, you look at what's going on with Bing, you look at what's going on with Xbox, you look at Windows Phone, you look at our server business, I mean, there isn't a place across the company where we're not making progress. I mean, some of our businesses have more challenges than others, some businesses are making a lot of money, some are losing some money, but there's always challenges. But when I look at the fundamental driver of our business is always what we're able to produce for our customers. And when I look at what's coming out of the pipeline right now, and I think about what opportunity that creates for the company, I mean, it's pretty amazing.

Q: In the Xbox business one thing that investors always hammer on is that you guys spent a lot of money to get where you are today, and lost a lot of money.

Bach: Sure.

Q: Did you spend and lose more than you would have wanted to in hindsight?

Bach: Oh, it's hard for a businessperson to answer, no, I lost exactly how much money I wanted to. (Laughter.)

Here's the way I think about it. The company did make deep investments, there's no question about that. On the other hand, you're now seeing the fruits of that reward, so three years of continuing profitability with actually I think a lot of upside going forward, especially given what we're doing with Natal. Plus the asset value of what's been created, forget the ongoing earnings potential that's been created, but the asset value of what's been created more than makes up for the investment we made.

It just turns out Microsoft is one of those unique places that will -- forget whether we can afford it or not -- that will -- is willing to take those kind of bets. And I think sometimes people give us -- because we're a bigger company and we -- all those kinds of things, people say, well, you know, they don't bet big, they don't -- they're not old, they're not innovative. I just kind of look around and I go, oh come on, I mean, Xbox to me, you know, in some mathematical way was a gigantic investment. And yet look, asset value paid off, earnings potential paid off, upside for the future pays off. Id' do that again in a heartbeat.

Sure there's things I would do differently along the way, no question, you always learn as you go along, but, wow, that's not one I would think twice about. Look, people thought we were crazy to do Word and Excel, said, oh, come on -- everybody forgets all this -- Lotus and WordPerfect and Dbase, you guys haven't got a chance against those guys. And that was a big investment.

Now, it was software based, so it's a little easier for us to manage. Hardware is always a little trickier. But it was a big investment. And when I started -- when I came back from Europe and started working on that business, you know, our market share was like 12 percent, right? And I'm not taking credit for it going where it did. Like I said, I was a cog in that world. But there were some smart people who said we can win this, and we're going to get after it, and that means we're going to invest, we're going to put our best development people on it, and we're going to make it successful. It seems like a pretty good, deep bet, and there's 10 other examples, Exchange, we can go and tell that story. If you look at what's happening with SharePoint, something nobody ever talks about, but just a great business, completely new concept, new work.

So, when I think about the company, maybe you think it's a setup question, but when I think about the company, I'm really proud of what's been accomplished, and I think the pipeline and the innovation engine is absolutely there for the future. Everybody still has to execute, like no question about that, there's always risk in actually getting things done, but, wow, I think there's a lot of opportunity in this place. Like I said, this is about -- my decision is about things I want to do, not about opportunities for the company.

Part 1: Why Bach is leaving after two decades

Part 2: How Project Natal could impact the Xbox business

Part 3: Lessons learned, and thoughts on Microsoft Courier

Part 4: Did Microsoft spend too much developing Xbox business?

Earlier Today: Bach, Allard Leaving Microsoft in big shift for consumer business ... Microsoft CEO Ballmer's memo on Bach, Allard departures.

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