Two years ago, Y Combinator founder Paul Graham posted a 1,188-word essay entitled "Microsoft is Dead." He said Microsoft's "shadow" over the software industry had disappeared, thanks to four factors -- Google, Ajax, broadband Internet, and Apple. "No one is even afraid of Microsoft anymore," Graham wrote. "They still make a lot of money -- so does IBM, for that matter. But they're not dangerous."
While Graham has built a reputation as a successful programmer and startup supporter (Y Combinator-funded companies include Reddit, Xobni, and Scribd), his essay on Microsoft drew a lot of criticism. Dave Winer said Microsoft wasn't dead, but was being "pulled back to earth by gravity." Microsoft biz dev executive Don Dodge pointed to his company's huge revenue growth and said:
Apple has about 6% of the computer market. Google has about 45% of the search market. Microsoft competes in desktop operating systems, server operating systems, databases, and development tools. Oh yes, I almost forgot, Microsoft has a multi-billion dollar Xbox gaming business, a multi-billion dollar MSN content and search business, a multi-billion dollar CRM and ERP business, and nearly a billion dollar business in Windows Mobile for wireless devices. So Paul, tell me again. Where is Apple and Google killing Microsoft?
Things have changed a lot in the two years since. Both Apple and Google have gained market share. The high hopes for Web 2.0 have been replaced by daily layoffs and a search for real revenue.
I emailed Graham to ask if he had changed his mind about Microsoft.
"A lot of people misunderstood that essay, and asked how I could claim a company making so much money was dead," Graham replied. "Obviously I didn't mean Microsoft was bankrupt. What I meant was that they were no longer a factor one had to consider when doing something in technology."
Graham stands by his claim. In fact, he's added two more Microsoft-eroding changes to his list.
"The big stories in the 2 years since have been [Amazon Web Services] and iPhone apps," he wrote. Graham still marvels that Web 2.0 startups get their remote computing resources not from Microsoft, but from Amazon: "An online retailer! It would have seemed almost impossible to people in 1999 that anyone would be saying that in 2009."
