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April 07, 2007


Emre Sokullu

Well said, Don... Numbers talk.


Paul wasn't saying Microsoft was unprofitable, any more than IBM is unprofitable. He's saying that new companies aren't scared of Microsoft anymore, and that's true.

Microsoft Ain't What it Was

You should go back and re-read his essay: you seemed to miss the entire point of it. He wasn't talking about money at all. He was talking about "Fear of Microsoft" and how it no longer exists.

Sheesh--he even predicts responses like yours in the last paragraph.

Steve Jenson

Yes but in 2000 Google didn't make as much money as the smallest business unit in Microsoft, either.

I believe that PG is arguing that buying all the web 2.0 startups would give microsoft the ability to build a web monopoly as powerful as it's desktop monopoly. Clearly you don't need that monopoly to make some money but looking at the price of Vista reminds us that it sure helps!



I think this is a willful misreading of Paul's point. To be fair, he did use some provocative language, but focusing on the fact that Microsoft is not about to go business is not proof that it's 'dead'. Ignoring his point is probably a bad idea for Microsoft, but that ship may have already sailed.

Graham's point is that Microsoft is no longer 'dangerous', in that you can actually compete with them without being mooshed out of existence. You can compete with them in an area which is the literal core of their existence, like Apple is doing with OS X, or you can compete with them in the area it claims it's going to dominate next (the web), like Google, and you can make this list for just about any product Microsoft makes.

Graham makes a lot of good points as to why (again, his points are why Microsoft is 'competitively irrelevant', not why Google or Apple is going to put Microsoft out of business), but here's what I think the gist of it is:

It used to be, as a developer, you had a choice: Develop for Microsoft, or develop for Y. There was a tipping point, where Microsoft, by virtue of being cheap (it was), or by being a monopolist, shoehorned their way onto the desktop. At that point, there were more machines running Microsoft than there were running Y, and the logic of the marketplace took over. You develop for Microsoft, and not Y, because Microsoft has _more users_. More individual users, more commercial users, more enterprise class users, you name it.

But along the way, something happened -- that something was the ubiquitous distribution of web browsers. Microsoft thought it won when it beat Netscape, but what it really did was ensure that every single computer on the planet was running a web browser. And, just recently.. let's say the last three years, these browsers became actually good enough to host and run applications. You can still write better apps for the desktop than you can for the web, but the apps you can write for the web are _good enough_.

Now, as a developer, you have a choice. You can write an app that lives on the web, or you can write one for Y. Y is anything other than the web, since the number of web browsers is _more than the number of copies of Windows_. The logic of the market is taking over, and even though Microsoft will likely to continue to be a profitable, even growing concern, the scales have tipped. The future of applications is applications on the web -- and that's a future Microsoft does not control.



It is you who keeps on drinking KoolAid. Look around you, who wants to use MS products anymore?! MS is getting attacked from all directions and MS has _failed_ in search and advertising-enabled business models. MS's growth rate will slow down and when it goes into a fall, it will be a free-fall.

You keep on bringing MS's growth numbers. OK.. let's look at MS's stock performance: http://finance.yahoo.com/q?d=t&s=MSFT

Compare it to DJIA or NASDAQ. Awful, isn't it? MS's cash cows have caught a mad cow disease.

How long before Ballmer "retires"? Who will replace him? Ozzie? Ozzie's the worst thing that could have happened to MS and MS's shareholders will protest him.

Anyway, be careful when throw the bricks in a glass house.


Joe Duck

Don - despite the fact you sound too defensive here, this is an excellent rebuttal to Paul's silly post. The "fear is good" notion Paul suggests is somewhat odd given the new sensibilities of Web 2.0 that suggest companies should be ... friendly.


Companies are starting to sell computers without any Microsoft products on them.



Don..he didn't say that MSFT is not making money..he is saying that msft is dead slow in adopting to the web! people like paul graham may have to rethink in making claims like this after ray-ozzie enters the market..It's been almost 2 years since rayozzie wrote the memo.I think it will be full of surprises this year?

The Outlander

I love MSFT, but Microsoft IS dead when it comes to Search! Operating System needs a LOT of improvement....However, it is a VERY complex problem to solve...! They are definitely the Software Giant and Google doesn't scare them! Google rules search! Gmail is decent too...!


Damn. Wish I had thought of it. Microsoft Dead. Excellent link bait.

Would Apple is Dead work too?


"MS is getting attacked from all directions and MS has _failed_ in search and advertising-enabled business models. MS's growth rate will slow down and when it goes into a fall, it will be a free-fall."

that's fine. MS doesn't have to win all. MS just need to be in the market like they did with Xbox. First generation of Xbox, barely pass GameCube and did so bad in Japan and look ugly and bulky. The second generation of Xbox did well. MS gain the market share and good reputation.

Overtime, MS will gain enought marketshare that it will start to generate profit. Xbox is one example and MS business software is the other.

It's like Don said, MS live search own 10% of the market. If Apple can live with 6% of the PC market. 10% is good enought to be in the search and advertising-enabled business models.

MS doesn't need to win whatever they enter. They just need to enter the market.


I think Paul's point is that Microsoft is significantly less relevant.

Stan Schroeder

@Don: sometimes it's nice to think that money isn't everything. What Paul has attempted to do here - and I did like his essay - was identify the point in which the zeitgeist surrounding Microsoft has changed. It doesn't have anything to do with money.

Alex Reuter

Hi Don -
I believe Paul was using the phrase 'Microsoft is Dead' in the same way Neitzsche used the phrase 'God is Dead'.

If God is dead, what is the proper way to conduct our lives? If Microsoft is dead, what is the proper way to conduct our software businesses?

Just my .02
Happy Easter


There are two differing points of view here on what it means for microsoft to be dead. One is the monetary viewpoint the other is product quality. Lets face it, since its inception, microsoft has been the purveyor of third rate software products. As a software company they will never be seen as an innovator or have they ever brought a 'killer app' to the marketplace. Sure, they've done extremely well financially through their use of restrictive software licenses, and their unfair business practices worldwide which has garnished them more anit-trust violations than kudos for their product line. Are IBM and Xerox dead? No, but they're making room in the hospice for microsoft.

Ben Saren

I stumbled upon this in my blog reading last night, on ZDNet... "Why Google IS afraid of Microsoft, big time".

Danial Jameel

Hello Don,

I always refrain from rehtoric and my reply will be based on the various Points of contention articulated by Paul Graham.

Paul Graham points to four reasons Microsoft is "dead";

"Google is the most dangerous and feared company now"

I think you made this clear enough. Also I highly doubt Google wants others to fear it. Their success is also based on their open access and compatibility.

"AJAX and Javascript is the new programming model of choice"

For this I can personally speak for. I am currently developing a web 2.0 venture namely UReporting. Our Project is based almost entirely on Microsoft technologies. We had the option to use both LAMP based development or ASP.Net/ MS Sql. We chose Microsoft as it served all our needs and then some. Mapping, mobile, streaming, AJAX, Scalability, Community building you name it we are doing it.
I have nothing against Javascript or AJAX but I can assure you Microsoft technologies can do everything that AJAX or Javascripting can. Also Ajax for ASP.NET is widely avaialable and used. This is a view not from someone who funds ventures but an actual entreprenuer seeking to minimize costs and develop a scalable and efficient platform.

"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."

Interesting point especially coming from someone who funds such venture...

In conclusion, While microsoft is definately facing some challenges today (normal for all major businesses), there is no indication they are even close to where Mr. Paul claim them to be.

Danial Jameel


1. To previous commentator MS did bring a killer app to market - the first GUI version of MS Word, which was - ironically enough - a Mac app, and a killer app for Mac sales for many years. Windows 3.0 was also a killer app for most businesses - regardless of whether it how it compared to other GUI OS.

2. While XBox might be a multi-billion dollar business, it's also been a loss-maker. Which is fine, it's a strategic loss-maker. Windows Mobile is similar. But you can't run at a loss forever. Market share isn't everything (on 5% of the market, Apple made 50% of the profit of HP and Dell combined - who own nearly 50% of the market).

3. Google search is around 75% in most EU nations, which is an interesting cultural difference. It may seem unimportant in the US, but the global computing market is about to become very relevant, as nations like China switch from pirated versions of Windows and proprietary Unix to Linux, as are many CE appliance makers. We also have far less loyalty to MS (or Apple) as great American companies.

Statistics can be looked at any way you like really - growth in absolute raw numbers, growth as a percentage (8% vs 25%), growth in profit, second degree differentials (trend of growth of profit growth - which is the sort of thing share analysts tend to be interested in).

But anecdotally, looking around I barely ever see a MacBook outside of a concert hall. Obviously I don't know anyone that really counts!


The reason why Web 2.0 startups don't care about Microsoft anymore is because they don't compete in that business. Startups (or the VCs that fund them) have realized in the past 10 years or so that there's little money to be made in developing Windows applications where they will eventually be out-competed by Microsoft. So they've moved on to the next big thing, which for a while was building dot-coms and now is building web 2.0 apps.

So, what will the VCs do when a dominant player (like Google) emerges in the web 2.0 app space? Move on to the next unexplored, new area whether it's building mobile-web-3.0-hyper-jax-com applications or sending millionaires into space and then rave about how Google is now dead.

It's also interesting to note how no Web 2.0 company makes even as much money as Microsoft's smallest businesses. The largest proponent of Web 2.0, Google, still makes the bulk of it's money from a Web 1.0 product - Search.

Dennis Peterson

I think you missed Paul's main point...that most of the new generation of smart, creative programmers aren't developing in the Microsoft ecosystem. Whether he's correct about that, I don't know, but if he is, it's going to be hard for Microsoft to stay relevant, as the new generation gradually inherits the industry.

Mario Miyojim

I share Graham's vision, but I was not being able to express it. Besides, I have a few clues on how Microsoft will lose shareholder support:
(1) Windows Vista. It is unlike anything MS did in the past; it is full of errors: DRM, impossible peripheral hardware specifications written by lawyers and marketeers, support for wrong partners (RIAA, Hollywood), requires nonexistent hardware, want to close the PC architecture, safety is no better that XP, has all legacy bugs from NT plus new exclusive ones born with new code.
(2) There is a method, immediately applicable, which will make Windows-based applications irrelevant:
to run Windows as a virtual machine under GNU/Linux--while the existing applications run on Windows, programmers will use Portland to port those applications to Linux.
(3) People are growing smarter, and they are no longer believing the Microsoft lies.
(4) Businesses can no longer afford migrating to Vista, because it is too expensive.
(5) Dell will start selling new computers with GNU/Linux preinstalled.
(6) Microsoft is buying back its own shares to keep the value up. Even with all its cash, sales at stock market are more than $1 billion a day. At a certain point it has to stop, then MSFT will nosedive to $10--adios.
Therefore, Graham said it using different signs; the fact is, Microsoft is a zombie now.


I think both you and Don are wrong. I think Microsoft is dying despite the money. Microsoft is a US company and as long as the US is dominant Microsoft can be dominant due to many factors. That is changing however and Microsoft is getting killed by open source and especially off shore open source. Google may or may not be the end of Microsoft, but Unix like OSes like OSX, BSD and Linux rock over Microsoft for most folks. Right now Microsoft still has the edge because most vendors in the US still bundle Microsoft, but that is changing and Vista will actually tip the scales in favor of OSX, BSD and Linux. I think Vista and Office 2007 are actually an "OS too far". They are the "Micro-channel" of Microsoft.

Don Dodge

Thank you all for your comments. Paul Graham is a smart guy and I usually enjoy reading his stuff. However, his "Microsoft is Dead" post was a link baiting piece of sensationalism.

His main points were Microsoft is dead, no one is afraid of Microsoft, and Microsoft is irrelevant. Clearly Microsoft is growing every year...far from dead. Microsoft never intended to strike fear in anyone, and Google doesn't either. As for Microsoft being irrelevant, that clearly isn't the case with the 80,000 partner companies or the millions of Visual Studio developers. And I think any company that generates $50 Billion in revenue is definitely relevant.

Paul lives in a very unique bubble that clouds his view. Apparently all his friends use Apple computers, Linux, and write AJAX apps. The world at large is very different.

I understand the anti-Microsoft sentiment. I am from Boston and here everyone hates the NY Yankees. They win too much and after a while people get tired of the winner and root for the underdog. Sports fans are fanatical about their teams and hate the perennial winners. Software is the same. People like Paul want to see someone other than Microsoft to win. Understandable.

Developers and customers have lots of choices. We work very hard to make Windows, Visual Studio, and SQL Server the best possible development environment for client/server and web based applications.

May the best solution win.


"Sorry to burst your bubble but it was never Microsoft's intent to scare anyone."

I'm not an anti-Microsoft zealot but this statement asks us to forget way too much history.

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