Paul Graham, founder of Y-Combinator, posted an article about Microsoft being dead and Don Dodge, of the Microsoft Emerging Business Team, quickly posted a desprate response boasting Microsoft’s revenue growth figures as a rebuttal. Both article’s have pretty strong points but I feel like both are too extreme to be completely valid.
Graham claims Microsoft is dead basically because the desktop is not needed anymore. He says applications are moving to the Internet and utilizing tools like Ajax to achieve this. While I think this is a very valid point, it seems Graham thinks the way to save Microsoft is to buy up all the Web 2.0 start-ups, implying Web 2.0 (Google) is the killer of Microsoft. I think he’s giving Web 2.0 too much credit here. Like Dodge points out, Microsoft is a software company and if Web 2.0 was killing Microsoft, it’d be killing all software. This is highly unlikely.
There is a cycle here which will never fade. People want computing power on their desks. Even though the Internet is fast enough to host some basic desktop needs (like email and word processing), newer CPU bound applications will always be around to take the places of the Web 2.0 converts. Again, this brings me to my reoccurring point: hardware companies keep the software companies afloat. Even Graham inadvertently acknowledges this fact when he points out that “the Microsoft monopoly didn’t begin with Microsoft. They got it from IBM.” Microsoft got the monopoly from IBM and it was sustained by companies like Dell and HP.
So Microsoft is not dead. They wont die. Like Graham says, they have enough money to just keep buying there way through the industry. That is until they have a resurgence of talent and clean up their products, just as Apple did with Mac OS X. I think what Graham really means is that Microsoft is not the superpower that they used to be and probably will never again be. Microsoft’s loss of danger to the other tech companies is a sign of this and is also how Dell can step up and start to support other OSs. Microsoft’s reign of terror is over.
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