Paul Graham writes in two recent articles, Microsoft is Dead, and the Cliff Notes explanation of why he thinks Microsoft is Dead. Of course, the articles have attracted a lot of attention - it’s a great headline - but is it true?
The first thing to understand is who Paul Graham is. He’s a venture capitalist. He invests in tech start-ups. Yes he has a tech/programming background, but today he’s basically about investing in small tech start-ups with the idea that one of them will grow huge and make him a big pile of money to add to the big pile of money that he’s already got. Nothing wrong with that - although you do have to realize that it colors his arguments throughout.
If you read Graham’s two articles, especially the Cliff Notes follow-up article, apparently he doesn’t mean “dead” in the sense of going out of business. Or in the sense not making huge profits. Or in the sense of not producing anything new. Or not making products that vast numbers of people use and pay for. What he really means, is dead as in the sense that the start-ups he’s involved with, won’t be competing with or scared of Microsoft. The specific words he used is "What I meant was not that Microsoft is suddenly going to stop making money, but that people at the leading edge of the software business no longer have to think about them" - "leading edge of the software business" of course being a euphemism for the sort of start-ups that Paul Graham is involved with.
I could remark that’s a darn funny definition of "dead" as far as anybody living outside of Paul Graham’s VC tech bubble are concerned. But I think more interesting question is why start-ups aren’t concerned about competing with Microsoft.
Think back to the 1990s for a moment. A common, and highly fashionable, tech business plan (I’m not talking about the Internet retailer boom of selling groceries or other stuff online) was to build something around the web/Internet that would somehow make some part of Microsoft irrelevant. This was typified by Marc Andreessen of Netscape remarking how the browser would reduce Windows to "a set of poorly debugged set of device drivers", and Larry Ellison of Oracle Corporation predicting that the Network Computer would pretty much displace all use of PCs.
But would anybody be excited about this type of plan today? Is it cool? Fashionable? Where the hype is?
Today’s cool is YouTube, MySpace and Google. The kids want to be the next Chad Hurley - and Bill Gates is just a dorky middle-aged guy that your dad might have admired.
And that’s my thesis: the real reason that Paul Graham thinks that Microsoft is "dead" is simply because the kind of start-ups that he is involved with, are no longer trying to compete with, nor displace, Microsoft. In other words, he’s saying that his start-ups aren’t going to try to take a chunk out of Microsoft’s $44.2 billion (and growing) annual revenue. Or to put in other words, competing with Microsoft as a business-plan, at least as far as Paul Graham is concerned, is what is really dead.
That’s a pity really, because even though he says eventually Microsoft may encounter problems (who would have thunk?), Paul Graham effectively concedes that Microsoft is going to make a lot more money in future. Some people are going to get rich competing with, and taking a chunk out of Microsoft’s revenues - although apparently not Graham’s start-ups because it’s unfashionable to even try.
(I suppose that I’m supposed to say 