February 12, 2005


R.I.P. Microsoft?: After Dominating the Technology Industry for Years, is Microsoft Poised to Collapse? (MICHAEL S. MALONE, Feb. 10, 2005, ABC News)

The other day I had lunch with the CEO of a mid-sized semiconductor equipment manufacturer. SEMs are the forgotten folks of the digital revolution. As the people who make the machines that make the chips that make the electronic products that run the world, they are at the absolute top of the electronics food chain. They typically know about what's coming in the electronics world earlier than anybody else. But their products are so arcane -- who cares about automated wafer steppers? -- the press almost never talks to them.

In the course of the conversation we talked about the coming Intel-Samsung war, the beginnings of a slowdown in the SEM business (presaging a chip turndown next year), and the sad fate of HP. It was in the middle of all this that a notion suddenly appeared in my mind: Microsoft is dying.

Why the sudden thought? Perhaps it was talking about HP; maybe it was the fact we WEREN'T talking about Microsoft (which would have monopolized our conversation a few years ago), or perhaps it was just my instincts were finally putting diverse bits of information together into a single conclusion.

Great, healthy companies not only dominate the market, but share of mind. Look at Apple these days. But when was the last time you thought about Microsoft, except in frustration or anger? The company just announced a powerful new search engine, designed to take on Google -- but did anybody notice? Meanwhile, open systems world -- created largely in response to Microsoft's heavy-handed hegemony -- is slowly carving away market share from Gates & Co.: Linux and Firefox hold the world's imagination these days, not Windows and Explorer. The only thing Microsoft seems busy at these days is patching and plugging holes.

Speaking of Gates: if you remember, he was supposed to be going back into the lab to recreate the old MS alchemy. But lately it seems -- statesmanship being the final refuge of the successful entrepreneur -- that he's been devoting more time to philanthropy than capitalism. And though Steve Ballmer is legendary for his sound and fury, these days his leadership seems to be signifying nothing.

There are other clues as well. Microsoft has always had trouble with stand-alone applications, but in its core business it has been as relentless as the Borg. Now the company seems to have trouble executing even the one task that should take precedence over everything else: getting "Longhorn," its Windows replacement, to market. Longhorn is now two years late. That would be disastrous for a beloved product like the Macintosh, but for a product that is universally reviled as a necessary, but foul-tasting, medicine, this verges on criminal insanity. Or, more likely, organizational paralysis.

Does anyone out there love MSN? I doubt it; it seems to share AOL's fate of being disliked but not hated enough to change your e-mail account. And do college kids still dream of going to work at MS? Five years ago it was a source of pride to go to work for the Evil Empire -- now, who cares? It's just Motorola with wetter winters.

Criminal enterprises can seldom withstand intense scrutiny.

Posted by Orrin Judd at February 12, 2005 6:08 AM

Much as I would like to see Microsoft taken down a peg or 10, whenever I see someone write a Microsoft story that includes an early paragraph that says "Look at Apple" I get the feeling we have a Jobsian disciple at work, being overly optimistic about Gates' impending downfall.

For Microsoft to really take a fall, their system would have to be the definite cause of people's aggrivation and anger about their computer's problems, not the victim. That's why there's been such a sharp drop in Internet Explorers' share of the market and a surge in Firefox users, because it's been given the blame for most of the computer spyware/virus/worm infections and Microsoft has done virtually nothing to fix it. The alterative comes at the right price -- free -- so people are fleeing Gates' product in droves.

Switching OSs would be much more expensive, since that would require new computers/software purchases all around. So Microsoft is going to live on for some time to come, though they may be in for some bad PR this spring if the Beta version of Longhorn comes out and falls on its face. But by the time the PR campaign for its final release is over, we'll be inundated with stories telling us this is the greatest thing since sliced bread (including -- inevtiably -- the Microsoft Music Store and Media Center that will come bundled with the new release).

Posted by: John at February 12, 2005 8:53 AM

Linux is free and runs on Intel.. no need to change hardware.

Yes, the office software needs to change but when it's also basically free, it looks really good relative to being forced to buy upgrades from MS.

What's killing MS is the incredible amount of support that is needed to constantly test and apply patches, and then fix all the other software that breaks because of the patch.

MS isn't doomed (BTW neither were/are Apple or IBM) but it's going to become a far different company in the next few years.

Posted by: Chris B at February 12, 2005 10:04 AM

Just switched to Firefox. Unbelievable improvement.

Posted by: Tom C., Stamford, Ct. at February 12, 2005 10:31 AM

ms is busy maintaining the status quo and not even doing that particularly well. they will soon fader than people think for the simple reason that they are not competent enough to keep up with the changes in technology exploding all around them. they were handed a royal flush (i.e. a monopoly position) by i.b.m. and managed to play it out nicely. ms' core competency is in marketing, not technology, and the days of the middleman are coming to a close.

Posted by: cjm at February 12, 2005 10:42 AM

Microsoft won't die anytime soon for one simple reason - it is (arguably) the major legacy operating system for most of the world's systems. Once a system acheives legacy status, it is almost impossible to dislodge it.

IBM is still alive because of this basic fact. Our company still has its major OLTP system running on an IBM IMS mainframe system. IMS isn't even supported by IBM anymore. When I joined the company in 1996, one of the company's IT goals was to "kill" the mainframe. Nine years later, and we still haven't done it. It is a major drag on our business competitiveness, but we still haven't been able to do it.

Posted by: Robert Duquette at February 12, 2005 12:14 PM

Tom C. illustrates a point I've been making - Firefox is good for Microsoft. It makes MS operating systems easier, safer and more pleasant to use. Much of the virus / spyware threat is eliminated, without Microsoft having to lift a finger. Firefox and its ilk make it far less likely for people to switch operating systems because they're fed up with virus / spyware, because they can instead just switch browsers.

It's really amusing to see OJ missing this point, because it's exactly the kind of thing he lauds President Bush for.

Posted by: Annoying Old Guy at February 12, 2005 2:53 PM

As Bill Gates noted when they tried to develop a good browser but failed, it's a replacement for the entire Windows interface and thus a rival that will eventually destroy them.

Posted by: oj at February 12, 2005 3:04 PM

It's almost as fun to see OJ periodically channel Janet Reno as it is to see him disparage soccer. Netscape thought they were going to replace Windows, and in response Microsoft built an amazingly great browser that has been dominant for eight years with relatively little additional investment. Even with the help of Netscape confidant Joel Klein, Microsoft cleaned their clock. Firefox is a decent browser, and just as Republicans and the nation would benefit from a reasonable Democratic party, Microsoft and the country will benefit from decent competition.

Posted by: Jorge Cuiroso at February 12, 2005 6:17 PM

If you like FirefoxTry the Open Office Suite. It does what Micro$oft Office does and the price is right $0.00 that is right Free. What I like is that it can move seemlessly between documents, web pages and spreadsheets. also itcan save anything as a pdf file and you don't have to pay adobe a cent.

Such a deal. Now how much is Micro$oft worth?

Posted by: Robert Schwartz at February 12, 2005 11:39 PM