Microsoft founder reminisces with friend and present chief Steve Ballmer; starts a new chapter in his life

On his final full day at Microsoft, Bill Gates went on stage to reminisce with his long-time friend Steve Ballmer and neither man could hold back tears as Ballmer handed Gates a large scrapbook as a farewell present.

Gates, who is stepping back to focus on his philanthropy, sat with chief executive Ballmer in a Microsoft conference room and meandered through moments in Microsoft's history. They stopped to get in a few good digs at IBM, whose first personal computers were loaded with Microsoft's DOS operating system before "Big Blue" adopted its own operating software and their relations strained.

"They went off with OS 2, we were left with good old Windows and sure enough the David versus Goliath story came out with the right ending," Gates said, eliciting laughter from the crowd of 830 Microsoft employees.

Gates, who founded Microsoft with Paul Allen in 1975, admitted that Microsoft has faltered along the way and certainly is not perfect today.

"When we miss a big change, when we don't get great people on it, that is the most dangerous thing for us," Gates said. "It has happened many times. It's OK, but the less the better."

Gates, who will remain Microsoft's chairman on a part-time basis, said he would still take on Microsoft projects picked by Ballmer and two other senior executives.

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Absent-minded chief

>> Gates often found himself driving to the Mircrosoft campus even when he was supposed to be headed somewhere else.

>> He forgot to pack a tie for his first meeting with IBM.

>> Gates  reinforced his intent to stay out of the company's day-to-day affairs from now on.