By Philip Elmer-DeWitt
May 27, 2010

Bill Gates gave him the keys to the kingdom ten years ago. What has he done since?

There’s a turning point that’s hard to miss in the infographic the New York Times put together to mark the moment Wednesday when Apple (AAPL) overtook Microsoft (MSFT) to become America’s most valuable technology company.

The turnaround — one of the most remarkable in U.S. corporate history — dates from January 2000, when Microsoft’s market cap began a 10-year decline and Apple’s started to catch up. It also happens the mark the date when Bill Gates stepped down as Microsoft CEO and named Steve Ballmer to replace him.

Gates and Ballmer had known each other since college days, when they lived on the same hall at Harvard. When the two men ran Microsoft together, they shared a common work ethic and management style — one that put a lot of faith in raw brain power and involved a good deal of shouting at underlings.

But Gates was a hardcore software guy. Ballmer — who grew up in the suburbs of Detroit, worked for two years as an assistant product manager at Procter & Gamble, and dropped out of a Stanford MBA program to join Microsoft — is a businessman at heart. Gates personally hand-coded the first microcomputer version of Basic. Ballmer never wrote a line of code in his life.

Neither did Steve Jobs, who can be just as nasty as Gates or Ballmer. But he’s got an eye for good design and a focus on the user experience neither of them ever demonstrated. The years since his return to Apple in 1997 have been marked by a series of breakaway product releases: the iMac, the iBook, the iPod, Mac OS X, the MacBook, the iPhone and the iPad.

What has Microsoft produced in the Ballmer era? Some Office updates, three versions of Windows — including Vista — the Pocket PC, the XBox, the Tablet PC and the Zune.

Ballmer also seems to have a blind spot for what Apple is offering customers. He goes out of his way in his public remarks to belittle the Mac’s market share gains (“a rounding error” he called them last July) and dismiss Apple’s products (“There’s no chance that the iPhone is going to get any significant market share,” he told USA Today in 2007. “No chance.”).

What Ballmer keeps coming back to is the market share of Windows, which still runs 9 out of 10 of the world’s PCs. So far, however, Microsoft has failed to grab a comparable share of the market for mobile devices.

Is there any wonder Apple is viewed by Wall Street these days as an investment in innovation and growth and Microsoft, by contrast, as a dubious bet on the status quo?

UPDATE: Ballmer dismissed questions about Microsoft’s valuation at a Thursday press conference in New Delhi, according to the
Wall Street Journal
. “I will make more profits and certainly there is no technology company in the planet which is as profitable as we are,” he said. “Stock markets will take care of the rest.”

[Follow Philip Elmer-DeWitt on Twitter @philiped]

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