Microsoft Is Dead[2007]

> I already know what the reaction to this essay will be. Half the readers will say that Microsoft is still an enormously profitable company, and that I should be more careful about drawing conclusions based on what a few people think in our insular little "Web 2.0" bubble. The other half, the younger half, will complain that this is old news.

With 17 years of hindsight to our benefit, my reaction is both of these things at the same time.

Fascinating to me that this only mentions phones once in passing, and even if it had made a big deal about that seismic change in the industry, it would still be wrong. It doesn't mention Microsoft's struggles in the console market, but would still be wrong. It mentions Linux once, doesn't talk about servers, databases, S3 or EC2, but it'd still be wrong.

Dunno what the lesson is, and obviously you can move the goalposts to make 'dead' mean something else. Maybe we'll see this again with all the companies that aren't quite AI enough today. Sure is nice having enormous amounts of cash on hand, though.

I think the title was (perhaps intentionally) overstated, but the content of the essay is correct. The better title (in the sense of more accurate, perhaps not for getting clicks) would have been "Microsoft Is The New IBM". And that is still true.

People blame Steve Ballmer but I think he did great stuff. He built the huge enterprise salesforce and got Microsoft a leg in the enterprise, where margins are much higher and consumers much less fickle. He also chose a very good successor and removed all the old timers who would have made trouble for Nadella (Muglia, Sinofsky to name a few). Microsoft went from mostly an OS+ consumer software company to this enterprise gorilla which will now have an IBMesque lifetime (meaning will survive for very very long) regardless of whether their projects are very good or not.

Sure he couldn't beat the iPhone, but the iPhone is the most successful consumer electronics product of all time.

This blog post is actually a good indicator of how ephemeral web applications are. The blog post contains a reference to some "Snipshot" webapp. But the domain is dead now, and it's impossible to get the software. It's even hard to see how the software ever looked like.

In contrast, we can all install Lotus 1-2-3 on today's machines, via emulation.

Writing webapps is writing something that will never exist in the future. At some point in time the server will be turned off, and nobody will see your work.

what I think most people will miss is the Microsoft from the 90s is very dead.

What they have now - office 365, linkedin and azure + a dose of minecraft and Marina Linux are nothing like those days.

Days when to succeed in software you had to be 10x better than microsft or they would release a half arsed competitor and destroy your business just because they were microsoft.

PG wasn't wrong, it's just that Microsoft was resurrected later in 2014 by Satya Nadella.

When Paul wrote this, the industry was witnessing a technological revolution across the board (smartphones, AWS, Google docs, etc) while Microsoft was drugged and lacking behind on all fronts. At the time, their latest product launch was probably Windows Vista.

It was a different company back then and it's such an amazing feat of Satya to manage to steer a ship of Microsoft's size.

Microsoft is still here and still Microsofting. They've had a few setbacks to total dominance. They fumbled the mobile ball and found that they couldn't compete against Linux and open source, which enable new forms of computing at the largest (cloud) and smallest (embedded/Raspberry Pi) scales that don't fit with their business model.

So they successfully pivot to co-opting the dev stack used in the open source world. That's their play with Azure, WSL, Visual Studio Code, and the GitHub and npm acquisitions: to make it impossible to do webdev on an open source stack without MSFT involvement, and hey, why not try out these other great MSFT products and services while you're at it?

It's a clever play. But they're not dead, irrelevant, or your friend.

It's really hard for a company to die once they reach a certain size because they have the resources to pivot, even if the pivot seems a bit late.

The two most extreme examples of this are RIM (now BlackBerry) of the mid-2010s when it was clear the smartphone market was no longer viable for them, and Apple of the 1990s before the return of Steve Jobs and acquisition of NeXT. When asked what he'd do with Apple in 1997, Michael Dell famously said "I'd shut it down and give the money back to the shareholders."

But both companies are still alive today (Apple more than BlackBerry) because they were large enough before they had to pivot.

Other big tech companies like Microsoft were never close to death at any time. Sure, they had periods of stagnation where they had to pivot (as mentioned in this blog post), but it was more like a cold than a life threatening illness.

This article was written just a few months before the iPhone was announced.

That was the first thought that came into my mind when he said

“It now seems inevitable that applications will live on the web—not just email, but everything, right up to Photoshop. Even Microsoft sees that now.”

Sometimes a new technology makes the inevitable quite evitable.

MSFT is up something like 10x in the last 10 years. Incredible.

Microsoft is dead indeed. Windows went straight downwards since Windows 7. All their products are not good. Can't remember a single MS software or service I'd use. They bought some companies like GitHub which are doing good, but that's not MS and they couldn't even buy OpenAI.

About two weeks ago, I had an epiphany that ‘Apple was dead’, since any cheap crappy device could act as a terminal to an AI infrastructure delivering a perfected and idiosyncratic user interface. Now, I’ve reconsidered.

Summary: It’s not “dead” in the sense that it’s defunct but it’s a mere shadow of its former self.

The leaked memo of between Bill Gates and his C-level executive(s) is an iota of the level of nightmare at MSFT.

https://www.syracuse.com/technofile/2008/06/bill_gates_someo...

This is classic demonstration of the fact, you do not have to get most of the things right, but extract maximum value when you are right.

We have the excellent advantage of hindsight but definitely in 2007 the general agreement was Microsoft was losing to Google and Apple, which were the darlings of the stock market while Microsoft remained stagnant.

time has all answers.

just like yc likes and other accelerators like to bet on founders - they too should look at company structures / incentives etc to evaluate the future of certain companies.

from afar you can tell microsoft environment breeds killers, unlike google and other tech companies besides facebook i.e zuck & oracle.

which is why is you can never count microsoft n the likes of intel or even in terms of other industries ford out.

look at how microsoft came and knocked down the tools in terms of developer tools. look at slack. the rest of the world uses teams - it comes free.

look at how they did in the cloud. look at so called 'AI' satya or not -- microsoft has the industry by the balls and they know it. fear of gvt is what keeps them at bay.

why people are assuming this essay main points are wrong?

it's very correct.

Microsoft windows and office only make money with kickbacks to govt buyers. see the documentary on Microsoft and EU. lots of money is moving under tables.

azure is a joke that mostly gets sales based on price for people who need to buy a cloud just because. in this regard they are a walking corpse like ibm was in the 90s.

then the money came from xbox, which they tried to kill several times and only got market share because they sold at loss early just because that's what they do without even thinking. Salesforce, and LinkedIn, which they bought after they were monopolies already (and owners only sold exactly because of the fear of saying no, which the article paints very well) and couldn't run to the ground no matter how bad and abusive it got. and lately openai related stock memes despite being the least protected player (as in no hand in chip design).

what exactly paints the article as wrong? they just got a few luck hits on the way down.

If you didn't tell me the author, I could've attributed to any random SV tech bro.

It takes massive ego to proclaim dead a huge, well diversified business that has strong net revenue, product demand and well defined moats.

Amazing how wrong Paul Graham was on this despite claiming to be an expert in tech companies.

> "So if they wanted to be a contender again, this is how they could do it: Buy all the good "Web 2.0" startups. They could get substantially all of them for less than they'd have to pay for Facebook."

"And I happen to have some Web 2.0 startups for sale, what a coincidence!"

Aged like milk.

It’s ok to be wrong. I’m having wrong insights all the time. You just have to acknowledge it and move along. As long as you don’t try to make it look like you were actually right given some amount of mental gymnastic.

Google is dead.

Paul Graham has been getting a lot of criticism recently, both from this obviously bad take and because of his praise for the fraud-ridden Lambda School and Paul's hero worship of Austen.

I personally appreciate the reality check that not everything these famous people think is worth writing down nor sharing.

Ok, thanks for letting me know.

> Microsoft's Windows was the dominant desktop operating system (OS) worldwide as of February 2024, with a market share of around 72 percent.

https://www.statista.com/statistics/218089/global-market-sha...

Paul is right though. It's dead in the same sense IBM been dead for many decades.

Paul Graham is dead