Tales of Microsoft’s Death Have Been Greatly Exaggerated

A flurry of nattering erupted over the weekend regarding PaulGraham’s declaration that “Microsoft IsDead“.

[Sidenote: Paul claims that he authored the piece to “say itfirst”. While you might be widely linked for your Yahoo glory days,Paul, you’re far from the first person to say it]

While Paul was obviously exaggerating to make a point (Ipresume he knows how to read a financial statement, and iswell aware that Microsoft’s revenue are still following a ballisticarc, and that >90% of PCs out there still run some variant ofMicrosoft’s operating systems), it shouldn’t come as a shock thatI’m in agreement with his core point — that Microsoft’s ability toherd the industry has seen an unbelievable decline over the pastseveral years, and that tech leaders aren’t all that interested inwhatever Microsoft is claiming that they’ll think about maybedeveloping some time in a few years — and indeed I’d said somethingvery similar just last week, albeit without theconfrontational, exaggerated title.

In today’s Financial Post I see that Goldman Sachs has just removed Microsoft from their highly-rated”Americas Conviction List”, specifically noting that investorsare nervous about the future of retail software. Sure, Microsoft isstill considered a “Buy”, but this is another indication thatpeople are seeing a future where Microsoft isn’t all-singing andall-dancing.

While looking for an online link to provide for the newsitem (I’m still a happy reader of dead-tree newspapers), Icame across thisarticle on ZDNet, in which the author says-

“but can you really say a company with $28.8 billion in cash ison the downswing?”

YES! Of course you can!

That $28.8 billion is owned by shareholders,and if they see it squandered in failed attempt after failedattempt at buying diversity, they’ll demand it back through anotherspecial dividend. Microsoft’s bounty of cash, and their massiverevenue, has never guaranteed themanything, and their history is rife with initiatives doomed tofailures (much like the ridiculous “turn on an internet dime”myth, many have a selective memory when it comes to Microsoft,forgetting how many of their ventures have been dismal failures.Expect the whole ridiculous “Live” branding to be yet anotherfailed direction).

Microsoft certainly isn’t dead, however it will likely gothrough some massive, externally forced changes in coming years asthe two foundations of Microsoft profitability — Windows andOffice — start to crumble.