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the stupid meme that wouldn't die

So as MS does apparently stupid things, their software isn't up to par, and the recurring Microsoft-doesn't-get-it theme is on the rebound. Google, in the meantime, is being hailed as the savior for all kinds of things, and is basking in glory, giving tours of the company to actors and politicians (!?) and moving to a new fancy location. Meanwhile competition for Google that is massing on other fronts is looked at as a curiosity.

Similar claims can be made for other "next-big-thing" markets, such as mobile devices.

Ohmigod, could it be the end of Microsoft?

Any of this rings any bells?

As far as I can see, this is as much a repeat of the situation in 1996 as we could get. Back then, pundits of all stripes all but declared Microsoft dead: a huge, inneficient, PC-bound company that couldn't adapt to the brave new world of the Internet. Around that time, MS scrambled to create the IE team and go after developers to react to the competitive threat created by Netscape (and how's this and this for deja vu?). But then, Netscape's advantage (like Google's or Symbian's today) seemed unnassailable. Other companies with little expertise in the area where then looking at the browser market (and who isn't looking at search and advertising today?).

The browser wars were not the first time Microsoft had demostrated that it could fight back. The previous ten years were littered with once-powerful companies that had been literally squashed: Ashton-Tate. Borland (nevermind its recent resurrection). Lotus itself (on the spreadsheet arena). WordPerfect.The difference with Netscape was that it all happened so publicly and visibly. Software markets had started to operate differently. But it didn't make much difference, not in the end, except for one thing: no one can say they haven't seen that Microsoft won't give up easily, or that, having missed a trend, they can't adapt.

Or that they can't move beyond their core markets; the idea that Microsoft can't move "beyond the PC" is ludicrous. For starters, in the space of only a few years they have carved out a decent portion of the server market. They have carved out another portion of the market for internet applications. (Let's disregard how they did it for a moment). Right now everyone seems to have forgotten about Palm for some reason, but PocketPC-based handhelds have been steadily growing, while Palm is considered a has-been. In only a couple of years, the Xbox went from being a bunch of marketing documents to the second gaming platform of the planet. In fact, Office, which everyone just seems to ignore, is a monopoly that Microsoft did not control at all as recently as eight years ago, and is currently the biggest source of revenue (and profits) for the company.

As I was saying a year ago, in a different context. They are the biggest software company in the world. They have managed software projects bigger than anyone else, with bigger deployments than anyone else, and pulled it off. They have, time and again, moved successfully into new markets, even as many, many of their attempts have failed. They have tens of thousands of really smart employees, thousands of which are millionaries, and that strangely enough keep working 12- or 14- hour days for the company. They have excellent management, and good software development processes. Somehow they maintain an internal image of themselves in which they are always the underdog, that allows them to react fiercely to threats. They have two strong monopolies, and a few weaker ones (Multimedia Encyclopedias, anyone?). They are pulling in $30 billion in annual profits, with ten billion in net income.

Oh, right, and they have fifty billion dollars of cash and short-term investments in the bank.

It doesn't mean that Microsoft is unbeatable, or anything like that. Just look at Intuit, who has successfully stopped MS for years. But early-mover advantage is not enough. The cool-factor is not enough. Being profitable isn't enough either.

So why this recurrent delusion that they have gotten slow in their old age? Who knows. Let's skip the psychobabble.

I guess that what I'm trying to say is: those who underestimate Microsoft do so at their own peril.

Categories: technology
Posted by diego on July 28 2003 at 12:21 PM

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