Is Microsoft Toast?

Here's a worthwhile read by programmer/venture capitalist/essayist Paul Graham with the provocative title "Microsoft is Dead." Scratch that--in 2007, that's neither a new nor a provocative notion. ("Microsoft: Still Dominant" would be the unexpected argument.)

But Graham does neatly sum up some of the reasons why the Behemoth of Redmond is no longer the scary, competition-crushing monster it was for a couple of decades--and why it's struggling to remain relevant.

He offers several obvious pieces of evidence--the rise of Google, the emergency of Ajax as a key Web technology, the pervasiveness of broadband, the reemergence of Apple--but most of his argument boils down to one overarching point: Desktop applications are no longer the center of the computing universe, and Microsoft is barely even on the map as a developer of Web-based apps.

Microsoft would presumably argue that hundreds of millions of people use Live Search, Hotmail, and its other services. But the company's offerings aren't the leaders in terms of sheer bodies using them, and they're sure not the leaders in innovation. And for reasons which may stem both from legal precedent and general lack of agility, it's done little or nothing to leverage the millions of copies of Windows and Office out there to bootstrap itself into the world of Web services.

(That's one of the best things about today's Web: For the most part, you can use whatever services you want with your browser of choice on any operating system you please, and be happily productive. If Microsoft's vision of the Internet circa 1996 had prevailed, none of that would be true....)

Microsoft would also presumably defend the relevance of desktop software. But Windows Vista feels more like compelling proof that it's exceptionally hard for a massive desktop application to keep pace with Web applications--it's all too obviously a product that was conceived years ago and which doesn't particularly reflect the most interesting things about applications circa 2007.

So is Microsoft dead? Not if number of customers or profit have anything to do with it, and it may have plenty of both for decades to come. But right this very moment, it's sure in the process of failing to change as computing does...

...just as Lotus and WordPerfect and Harvard Graphics never recovered when the world went from DOS to Windows...

...just as CompuServe stalled when AOL came along and online services went truly mainstream...

...just as AOL was equally confounded by the arrival of the consumer Internet...

And so on, and so on.

You gotta think that the chances are increasing every day that the world will eventually look back on Microsoft as a company that had it all and then fumbled it. And even if it manages to unflummox itself, it may be too late. (Thinking of Lotus again, it eventually released some excellent Windows applications--but only after it was impossible to regain ground it had lost to Microsoft Office.)

Time for a quick poll:

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