Bill Gates bids a teary farewell to Microsoft

The 52-year-old Gates said the company had made "a mistake" not recognizing earlier how Web search and online advertising -- businesses dominated by another start-up turned powerhouse, Google Inc -- could transform the software industry.

However, he cautioned skeptics not to count out Microsoft.

"I love that kind of thing where people are underestimating Microsoft," said Gates. "Yes, we make mistakes and we know it, but we come back and learn from those things. A lot of our best work is the result of that."

After 33 years, Gates said he sometimes finds himself lost in thought, driving to Microsoft without realizing it. He also said he will move out of his corner office -- making way for Ballmer -- into a smaller area one floor below.

"I am sure there will some day next month where I start thinking about software and I will start driving here to Microsoft, go up to the fifth floor and walk down to my office and they will be remodeling it," said Gates with a chuckle.

"In fact, they were wondering if I was leaving at four or five today, so they could get started on that."

Go to Reuters MediaFile blogs.reuters.com/mediafile/ for more excerpts from Gates' last day.

(Editing by Phil Berlowitz and Carol Bishopric)