Paul Graham, founder of Y-Combinator, declares Microsoft is dead. Paul must be living in a cave somewhere, or drunk on the Web 2.0 Kool-Aid. Paul obviously wrote his headline to grab attention and attract links to his blog. TechMeme shows that he succeeded.
For the record, Microsoft is growing revenues at over $4 Billion a year and is on track for $50 Billion this year. Since when does growing $4 Billion a year equal DEAD? If that is dead I know a lot of companies that would like to be so dead.
Paul Graham points to four reasons Microsoft is "dead";
- Google is the most dangerous and feared company now
- Broadband Internet connections make the desktop irrelevant
- Apple "Their victory is so complete I am now surprised when I see a Windows PC"
Holding up Apple and Google as the Microsoft killers is curious. Microsoft is a software company. Apple is a hardware company and Google does consumer web search. I have a lot of respect for Apple and Google, but Microsoft killers? I don't think so.
Later in his blog post Paul graciously proposes how Microsoft could come back from the dead.
- 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.
- Put them all in a building in Silicon Valley, surrounded by lead shielding to protect them from any contact with Redmond.
Buy all the Web 2.0 startups? It would make for good headlines but wouldn't contribute much to the bottom line. My guess is that all the Web 2.0 startups combined don't generate as much revenue and profit as the smallest business unit at Microsoft.
Hyperbole is the weapon of the Web 2.0 pontificates. Facts are ignored in favor of myopic observations. Thankfully these visionaries don't run real companies with stockholders, millions of customers, and thousands of employees.
Apple has about 6% of the computer market. Google has about 45% of the search market. Microsoft competes in desktop operating systems, server operating systems, databases, and development tools. Oh yes, I almost forgot, Microsoft has a multi-billion dollar Xbox gaming business, a multi-billion dollar MSN content and search business, a multi-billion dollar CRM and ERP business, and nearly a billion dollar business in Windows Mobile for wireless devices. So Paul, tell me again. Where is Apple and Google killing Microsoft?
Microsoft's Live Search has about 10% of the search market. Certainly not where we want to be, but still a potentially very profitable business. If Apple can make money and be considered a leader with just 6% of the market I guess Microsoft can do well with 10% of the search market.
I guess in Web 2.0 speak "dead" equals boring...and "boring" equals profitable. OK Paul, you can call me dead anytime.
UPDATE: The Paul Graham apologists are already coming to his defense saying "he said dead, but what he really meant was that Microsoft is not feared anymore". Sorry to burst your bubble but it was never Microsoft's intent to scare anyone. Microsoft has a huge partner network of over 80,000 companies who enjoy working with Microsoft. Microsoft does a lot to encourage partners and help them make money. Further, Google doesn't scare anyone either, and I don't believe they want to. There are hundreds of search startup companies all looking to take a bite out of Google. I know the guys at Powerset, and several other startups, and I can tell you they are not afraid of Google.
UPDATE 2: Just to put $4 Billion of growth in perspective, Yahoo's entire revenue last year was $6.4B, and Adobe had revenues of $2.57B. Think about Microsoft growing almost an entire Yahoo in one year, or almost two Adobe's. The numbers are staggering. Forget the numbers, how about creating the Xbox gaming division from nothing and growing it to a multi-billion dollar business against entrenched leaders? How about getting into the cell phone business with Windows Mobile and winning a good percentage of the Smartphone market? Growth is happening in many areas, but it doesn't get the press and buzz that the free services get. No problem...it comes with the territory.