2006 Won’t Be The Year For Microsoft

Bradexcited by what he saw at PDC.
BradFeld, venture capitalist: 2006 Will Be The Year ofMicrosoft.
[Scobleizer: Microsoft GeekBlogger]

A surefire way of getting linked on Robert Scoble’s highly ratedand ranked blog is to saysomething promising about Microsoft, or to say something negativeabout Microsoft in a way that Mr. Scoble can easily defuse whilepretending to agree with you (such as http://radio.weblogs.com/0001011/2005/09/16.html#a11174,where Scoble subtly claims that Balmer was being misinterpreted).In this case, a VC was drunk on the PDC, and like many before himpresumed that everything Microsoft spins is gold. Many foolishpredictions have come out of such a situation.

In any case, while Microsoft will continue to do very well by any definition, it’s quitea stretch to call 2006 the year of Microsoft.

  • SQL Server 2005 and Visual Studio 2005 will barely be out ofthe gates, having come out (hopefully) at the end of this year – Ibelieve early November. It will be quite some time before legacyshops (which are of course the bulk of SQL Server customers. TheRDBMS market isn’t a heavily expanding market, and is largelyselling to existing customers or trying to steal customers fromyour competitors) will upgrade their SQL Server installs,especially given the large schism to 2005. Visual Studio 2005 is agreat product, but it’s largely an upgrade/maintenance release forthe existing Visual Studio base, a large percentage of which are onthe MSDN program anyways and thus will upgrade at no revenueadvantage to Microsoft.
  • Vista will see adoption among the leading edge, and of coursewill replace XP on new PCs (to no gain to Microsoft), but it willsee negligible adoption in corporations. Many corporations haven’teven modernized to XP at this point, 4 years after itsrelease and despite it being a minor difference from 2000. Vistarepresents a pretty large transition.
  • Office 2006 is similar to Vista – it’ll take years to see heavyadoption in the corporate space, and otherwise will largely besales to new buyers (who will just be getting 2006 instead of itsclosest competitor, Office 2003).
  • Many of Microsoft’s new technology platforms will seenegligible adoption in the first, and even second, year. This isjust experience talking, but there is a long list of examples ofhighly lauded Microsoft technologies that struggled or saw littleadoption for years (.NET being an excellent case. By now we weresupposed to be awash in .NET applications. While it is asuperlative web platform, and was a critical upgrade to classicASP, the desktop world has been barely impacted by .NET at all,against most predictions)

Undoubtedly Microsoft has some great products, but we’re talkingabout a company that needs to maintain a revenue of $10 billion aquarter, and with programs like software assurance and the MSDNprogram, these upgrades are long overdue. If anything,these releases are about avoiding a loss of revenue stream ratherthan an increase of revenue stream.