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Paul Graham Claims "Microsoft is Dead"
netbuzz writes "He doesn't mean dead as in six feet under, but rather that the software giant no longer instills the kind of fear — particularly among entrepreneurs — that it did back in the day when it was making road kill out of companies like Netscape. Microsoft obits have been around for almost as long as the company, but Graham's stature, style and devoted following are likely to make this one a classic."
While many large companies don't fear Microsoft as they used to, there are still multiple small ones who still have a fear of being swallowed whole or being beaten out of business. Microsoft, if nothing else, still has the power it needs in order to take another (smaller) companies ideas and launch them themselves, creating a hit and effectively driving their competition out of business.
I think that tells you a lot about Paul Graham's everyday environment. He's working with startups, he's trying to put together teams of the bright and innovative, and what he's finding is that most of these people are not using Microsoft software.
I suppose you have to allow for a bit of statistical bias there. Since Mr, Graham is (presumably) involved in selecting these people, it's entirely possible that a subconscious selection criteria might be "doesn't do windows" or something similar.
Even so, I think he's got a point. How much of that market share is down to corporations who bulk-order generic beige boxes based on buying guidelines that are fifteen to twenty years old? How much is down to private homes where someone wanted to "get a computer" without realising there was a choice, or where the major criteria was that it should be "the same as the one at work".
It wouldn't surprise me at all to find that the Microsoft market share among the up-and-coming wave of computer innovators is actually very slim. And if that is in fact the case, Microsoft should indeed be worried.
Don't let THEM immanentize the Eschaton!
You see, eventually these folks, flush with their startup money have to evolve into businesses with CUSTOMERS. This is the moment when all their foresight, vision and knowledge gets kicked in the ass by the reality of their target audience, who whether they like it or not, are generally using Windows in one form or another. I see this all the time. Awesome ideas, cool marketing strategies, beaten senseless by a a few basic questions: "This is cool, but will it work with Exchange? No? Damn, we cant switch. Sorry." "You mean we cant SSO with this?" Or "Okay, but can I control this through GPOs or can we LDAP it with Active Directory? No? Damn. Sorry, we cant switch."
No, Microsoft is not doing anything intreguing, but I think that for the moment(though not too much longer) they have enough entrenchment to fight off all but the most innovative of ideas. Microsoft can still zap Apple any time they want by stopping MS Office development on the MAC. This will change too, but if your business docs are in nothing but Word and Excel, you are not going anywhere soon.
One of the reasons for the dotcom bust was that too many startups never got around to the thought of what their customers WANTED, thinking that they could just convince them that their idea was so cool, so sweet, that they would just jump on it, without business considerations being a factor.
Its just like parental pride in a newborn baby. No matter what it looks like, they think the child is beautiful, when in reality, it could be a hideous creature and they would never know it.
If you are an Entreprenuer who believes that they have a target market large enough to pay back their VC without some form of Windows compatibility, they are headed for a fall, just like all the others before them. You dont find a Google every day of the week.
Computing Intensive stuff like video editing, games, etc, are going to remain on your computer.
But word processing? I doubted it myself, but I really like Google Docs and Spreadsheets - it allows me to work on certain things on any computers without dragging files around - and I can collaborated on a word document or spreadsheet with a ton of people without a ton of file swapping happening - I just have to invite who I want to look or give them read/write access - and I can see their revisions easily.
That is the unhyped, 0 buzzword reason I like it.
That little microcosm pretty much defines the limits of the industries that evolved around the commercial computer-on-a-chip.
Thirty years experience in programming for the micro computer.
Thirty years experience in buying, stealing, licensing or otherwise acquiring other companies' programs and adding hack after hack to it to "increase" features and "fix" bugs.
That is probably how it should read. MS didnt write anything they currently sell. They acquired it and revised it and added stuff to it. There is a very very long list of all of MS' acquisitions someplace online listing them all - including every part of Office, the entire graphics engine (including DirectX), IE, the Windows GUI, The WinXP theme changes, DOS, Win16, IIS, Exchange, and on and on. Acquired and added to by MS.
Yeah, maybe that qualifies as programming... but to me, the programmer is the person who wrote the apps to begin with... the work MS did is called modifying - which is done by programmers as well... but the way you have it worded makes it sound like MS actually programmed the stuff they sell.
StarTrekPhase2 - The Five Year Mission Continues!
Uh huh...
That is how an entrepreneur thinks.
What is most important to Microsoft when making acquisition decisions? People are the most important factor in any acquisition. Microsoft looks for talented engineering teams with vision and passion and experienced management teams. Second is technology and IP that can add value to an existing Microsoft product. Third is the opportunity to acquire stand alone products for existing customers. Examples include Visio, Hotmail, and Vermeer. Another, more rare, decision point is the opportunity to enter whole new markets. Great Plains and PlaceWare are excellent examples.
How does Microsoft decide to acquire rather than build internally? This is the toughest question in any acquisition discussion. Microsoft has thousands of very talented software engineers that can build just about anything. How can you justify paying hundreds of millions or even billions for something a team of 30 engineers could build in a year or two. That translates to about $12M of development cost versus a huge acquisition cost. Technology is not the issue here. It is all about marketing channels, sales expertise, and market leadership in segments where Microsoft is not strong.
It comes down to this; if the company in question has a product that is squarely in the domain of an existing Microsoft product than the valuation is a small premium over the internal development cost. If the company has market leadership in a new product space or market segment than the valuation goes up significantly.
Entrepreneurs should remember this. The "barriers to entry" are most often market position, not technical brilliance. I have heard start-ups say "we have a two year lead on our closest competitor". In fact, I have said it myself at previous start-ups. I was wrong. Most technologies can be replicated by a talented engineering group within a year or less. Many times a similar technology can be licensed immediately and a new product shipped within months.
Many start-ups have failed by focusing too much on their technology and not enough on the value they bring to customers and the channels they use to service the customer. Many times the early innovator fizzles, and a "fast follower" comes in and makes all the money. "Microsoft will acquire my company"