Dead MSFT

Lots of confusion, discussion, and vitriol around Paul Graham’s essay, Microsoft is Dead. Don Dodge asks the question “since when did $4B a year = dead?”

He even goes on to say, in an addendum that:

Just to put $4 Billion of growth in perspective, Yahoo’s entire revenue last year was $6.4B, and Adobe had revenues of $2.57B. Think about Microsoft growing almost an entire Yahoo in one year, or almost two Adobe’s. The numbers are staggering.

Well, those numbers WOULD be staggering if it didn’t amount to a YOY revenue growth of only 8.7% in the year of a new (major) product release. As a coworker of mine is fond of saying, “just barely beating the market isn’t a very good business plan.”

The acceleration of revenue and earnings at MSFT is negative. While this will allow the company to remain profitable for many years to come, it’s not exactly the juggernaut of growth it used to be. They can’t get much bigger, and their attempts at entering new markets have been clumsy, at best (XBox excepted, though, I don’t think MSFT has earned a penny from this effort).

It has always been foolish to ignore the predictions of technical early adopters. Like Paul says in the end of his essay:

The other half, the younger half, will complain that this is old news.

The perception of death is as bad as death itself. Most of all, it hurts recruiting for new talent. If MSFT isn’t seen as a great technical innovator, the best and brightest won’t want to work there anymore, and that is the beginning of the end for a technology company. Ask any bright young programmer about MSFT: they’ll probably agree with Paul.

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