Last week, as rumors were circulating that Bill Gates would step down from his post as chairman at Microsoft to take a more direct role in steering the company toward its future, I ran across a major find in a Baltimore thrift store—a pristine hardbound first edition of Gates’ 1995 book, The Road Ahead. Written at a critical point in the history of computing technology, the book laid out what Gates saw as the coming wave of innovation. He outlined the “information highway” in which PC, television, and phone converge into a Windows-powered world of information on demand and billed by the byte.

The book, which sold over 2.5 million copies, barely mentioned the Web and spent more time discussing the business models of online services like AOL and CompuServe than the Internet itself. And Gates spent even more pages talking about Encarta, Office, and the great things that Microsoft was planning—such as “wallet PCs” that would carry digital money as well as personal planners.

New York Times reviewer Joseph Nocera called the book “bland and tepid.”

“It reads as if it had been vetted by a committee of Microsoft executives,” he wrote. “Chances are, it has been.” The book was lampooned in a repurposing art project called “Toad Head.” And many believed the book showed Gates—and by translation, Microsoft—as out of touch and more interested in self-promotion than innovation.

Almost 20 years later, Gates is being called in from the bullpen to help a new CEO sharpen Microsoft’s technology and product strategy, with the title “Founder and Technology Advisor.” The question is, with Microsoft facing yet another inflection point in technology—a “mobile first, cloud first” world, as new Microsoft CEO Satya Nadella called it today—and with much more uncertainty ahead of it than it faced at the last inflection point, is Bill Gates really the right person for that job?

Repaving the Road

Gates is a smart guy, both as a technologist and a businessman. But he is not a tech-psychic. The Internet caught Microsoft by surprise and pushed it into survival behaviors that would eventually lead to an anti-trust suit, including an alleged threat made by former Microsoft Group Vice President Paul Maritz that the company would “cut off Netscape’s air supply” (as reported by my colleague Dan Goodin back in 1998). And despite Microsoft’s plans for a “wallet PC,” consumer mobile caught Microsoft by surprise, too, as Apple delivered the iPod and then the iPhone and dominated the market.

But in 1995, Bill Gates’ view of the future (and that of co-author and Microsoft vice president Nathan Myhrvold) was close to the view held by many of Microsoft’s corporate customers. Just a year earlier, I had been told by the CEO of a publishing company that I worked for that the Internet was “just a fad” (and I promptly started sending out resumes). And at InformationWeek, where I ended up a few months later as a reviews editor, an assignment to the position of “online editor” was viewed as a punishment. Content producers were playing down the Web as a channel because they hadn’t figured out how to make money off of it (and some still haven’t).

Gates gets partial credit for recognizing that the Internet would be successful and inexpensive because it did for telecommunications what the PC did for computing. It provided a standards-based, open platform where developers and service providers could create and compete. He also was right (generally) about the security issues of the Internet.

But his biggest concern was that there wasn’t an effective way to bill for it. “Although a great deal of information will continue to be free,” he wrote, “I believe the most attractive information, such as Hollywood movies or encyclopedic databases, will continue to be produced with profit in mind.” He foresaw the Internet as the freemium part of an information highway system, with all the really good stuff behind paywalls or on commercial online services. “Over the next several years the evolution of on-line services will…create an incentive for suppliers to furnish great material. There will be new billing options—monthly subscriptions, hourly rates, charges per item accessed, and advertising payments—so that more revenue flows to the information providers.”

On the mobile device front, Gates’ ideas about the “wallet PC” sound a lot today like what the smartphone has become. But some of the feature set that Gates envisioned was a bit off:

Wallet PCs with the proper equipment will be able to tell you where you are anyplace on the face of the Earth. GPS receivers…will be built into many wallet PCs. The wallet PC will connect you to the information highway while you travel a real highway and tell you where you are. Its built-in speaker will be able to dictate directions to you to let you know that a freeway exit is coming up or that the next intersection has frequent accidents. It will monitor digital traffic reports and warn you that you’d better leave for the airport early or suggest an alternate route… Some wallet PCs will be simple and elegant and offer only the essentials such as a small screen, a microphone, a secure way to transact business with digital money, and the capability to read or otherwise use basic information. Others will bristle with all kinds of gadgets, including cameras, scanners that will be able to read printed text or handwriting, and receivers with the global-positioning capability. Most will have a panic button for you to press when you need emergency help. Some models will include thermometers, barometers, altimeters, and heart-rate sensors. Prices will vary accordingly, but generally wallet PCs will be priced about the way cameras are today…

Ironically, what Bill Gates didn’t think of—and what was apparent from much of Microsoft’s early mobile strategy—was the idea of using the same platform approach for "wallet PCs" as had succeeded for normal PCs running Windows. In other words, he totally missed on “apps.” Microsoft never delivered a “wallet PC.” It delivered Windows CE instead and eventually Windows Phone. It would take Apple’s iPhone, and then Android, to deliver on the idea.

Déjà vu all over again

The situation Microsoft—and all of us—face in 2014 is not all that different in many ways from 1995. A new metaphor for computing (cloud) and a new computing platform (mobile) have substantially disrupted the incumbent technology (PCs), just as PCs and the client-server model had upended much of corporate IT back then.

Cloud computing still has a certain “information highway” sort of awkwardness to it for many people—it takes many forms. News anchors speak of it with the same confusion as Katie Couric had about the Internet in 1994. It still lies outside the comfort zone of many in corporate IT, let alone consumers, who may use it disguised as various applications or services but generally don’t have a clue how it works.

But the problem that Microsoft now faces is that, unlike in 1995 when the company was riding the client-server/PC wave, its installed base is what is getting disrupted by these new technologies, unless the company can innovate its way into being a disruptor itself. Microsoft plays from a position of weakness in mobile, despite its acquisition of Nokia in a saturated market. Windows Phone is the OS/2 of mobile, while Android is (ironically) the Windows of mobile.

Microsoft hasn’t dominated the cloud, either. Amazon is the de facto standard for public infrastructure as a service, much like DOS and Windows were the de facto standard for the desktop. Google dominates search and public cloud apps. And despite its efforts, Microsoft doesn’t own the de facto standard for private clouds, either—though it's hard to say if anyone does.

That puts Microsoft in a difficult position and a much different situation than when Bill Gates wrote The Road Ahead. The company has to find a way to create consumer and business products that leverage Microsoft’s strengths and somehow catch or create the zeitgeist of whatever “mobile first, cloud first” means. Microsoft needs a Steve Jobs-like slavish attention to user experience that will make people want to live their lives within Microsoft’s digital framework.

Bill Gates is a smart guy. But he's historically left user experience to others and focused on building Microsoft's core technology platforms. Microsoft doesn't have the luxury of settling for "good enough" user experience anymore. And Gates and Microsoft will need to leave the thinking that created The Road Ahead behind them for the road ahead.