[hyp0]

> I already know what the reaction to this essay will be. Half the readers will say that Microsoft is still an enormously profitable company, and that I should be more careful about drawing conclusions based on what a few people think in our insular little "Web 2.0" bubble. The other half, the younger half, will complain that this is old news.

[wdewind]

Look at the arguments PG makes for MSFT being dead: because he doesn't invite them to demo days (seriously, afaict that's 100% of the evidence he presents). Look at the arguments you make (it will be hard to reverse death, it will be hard to sustain constant revenue). The premise of both is ridiculous, because again, there is nothing to reverse, and their revenues are not constant.

Are any of these arguments actually supported by the data?

Sort of: MSFT had a hard time around the year 2000 due to the bubble, as you pointed out. But their growth since then has been pretty respectable, especially in the last 5-10 years, and if you compare their growth rates with GOOGs they really aren't far off despite MSFT being a much bigger company during that time.

Overall I feel like you are asking the question "How will MSFT ever recover" and I reject the premise of that question. Recover from what? What evidence do you give that MSFT is not doing well right now?

PG wrote that essay 7 years ago. Take a look at MSFTs numbers for the last 7 years. FWIW I suspect I am the younger half as I was only 18 when he wrote that essay and I don't think it's 'old news' or news at all because it's simply not true. And that PG anticipated this counter-argument doesn't make it incorrect.

[hyp0]

I feel we're approaching a resolution.

"Dead" is misleading hyperbole - pg emphasises that MS is "highly profitable". His data point is that MS, in his and startups' experience, is no longer a threat. It's just another big company.

I was wrong to say "constant" revenues. But I think my main point, the contrast between a rapid growth period and a steady mature phase, is accurate. The MAX graph shows it, but it's hard to appreciate the exponential growth on the left, because it's so small - expanding the scale would help show it. But MS was seen as astonishingly successful leading up to 1986 - data isn't even displayed for that far back. MS was founded in 1976, DOS released in 1981, which was an instant best seller, on the coattails of IBM's PC, which opened floodgates to the pent-up demand for desktop computers, with the reassurance of "I.B.M.".

So maybe "past its prime" isn't accurate either, but "past its period of incredible meteoric rise". Depends on the definition of "prime".

---

Above is the quantitative data you're asking about. But there is qualitative data, too, which is the basis of predicting what will happen next. By looking at the basis of MS's business success, and knowing how businesses tend to evolve from studying other business, we can try to predict what will happen next. MS's success was based on IBMs -> DOS -> Windows -> Office, leveraging each to the next. With IBMs, DOS and Windows no longer dominant, they are left with Office fileformats and skill at serving business customers. These are strong skills, but the aren't the terrifying killer competitive advantages MS used to have.

So, maybe it's mostly the dramatic constrast with what MS used to be. If you didn't see what MS was before, the contrast wouldn't strike you.

I see that MS are having success with cloud-based enterprise stuff. This makes sense, if it's the same software; they are good at serving enterprise customers, who would prefer not to have to switch. It may also represent going up-market - which is typical for incumbents whose low-end is under threat. It often leads to better and better profits until the low-end is eventually good enough and takes over. (Christiansen's The Innovator's Dilemma). Resources and technical talent and business skill aren't enough to save a company when the grounds of their advantage erodes.

I think the basis of pg's idea is especially for web-based companies. You may have heard of startups getting killed by google moving into their space (or, buying them). It's especially dangerous for people making add-ons for twitter, facebook etc. Now, MS used to do with with Windows: you'd make a product, it was good, MS would roll out that feature in Windows itself... you are dead. But that doesn't happen for the web, because it isn't MS's platform. And so people aren't scared of MS - that's pg's point, I think.