The rumours of Microsoft's death

Smooth newt, or palmate newt?

Last week, Paul Graham posted an article on his site, titled Microsoft is Dead. By the high standards of his essays, it seemed like a flawed piece, leaving it unclear exactly what he was claiming about Microsoft's impact on the rest of the software industry, past, present or future. A few days later he published a follow-up article, to explain what he meant. But his case still seems weak to me. He writes that “I know that [Microsoft] seemed dangerous as late as 2001&rdquo, but that “No one is even afraid of Microsoft anymore”. He concludes that, in a certain sense, Microsoft is dead. I think there is a far simpler explanation: The current mood within the software industry towards Microsoft much more accurately reflects the real threat they present, compared with the exaggerated perception a few years ago. That was a bit like the perception of the danger of Islamic terrorists in some Western countries now: Widely accepted and discussed, even if statistically quite remote compared to other more mundane risks.

In his original article, Graham alluded to a malign shadow that was once cast by Microsoft. In the follow-up, he explains that “people at the leading edge of the software business no longer have to think about them” (as constituting a threat). But I'm skeptical that the leading edge of the software business has ever been genuinely threatened by Microsoft. Microsoft usually enters established and lucrative markets. These markets may have been created by innovative companies, but by the time Microsoft releases its product, the leading edge has moved on to somewhere else. Consider CP/M and MS-DOS, Macintosh and Windows, 1-2-3 and Excel, Notes and Exchange, Navigator and IE, etc. The company that developed the first product in each pair was once a pioneer, but when Microsoft went after them, they had already grown out of that pioneering phase.

So it looks like an immediate competitive threat from Microsoft is a signpost that you have left the leading edge of the software business, and that you are now in a well established market. In that situation, it would be surprising if competitors did not emerge. No company likes competition. But competition is sacred in capitalist societies, so it is difficult to admit publicly to feeling threatened by competition, or the prospect of future competition. In contrast, feeling threatened by Microsoft, a convicted monopolist, seems perfectly reasonable (even if any real threat from Microsoft towards your company is very remote). I think this is how the appealing but false idea arose of Microsoft as a widespread threat to software companies.

The last few years have seen the rise of Google, Firefox taking market share from IE, the rebirth of Apple, and the embarrassing problems with the development of Windows Vista. So now Microsoft is thought of as just another flawed, and perhaps mortal, software company.