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Microsoft: The Faint Smell of Rot 903

Posted by Zonk
from the could-happen dept.
happycorp writes "A business reporter for ABC/Fortune is asking whether Microsoft is poised to collapse, based on years of industry observation (with successful calls in the past, he notes) rather than purely technical considerations. A short read, with this favorite quote: "if you sniff the air, you can just make out the first hints of rot.""
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Microsoft: The Faint Smell of Rot

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  • Um... (Score:1, Insightful)

    by daveschroeder (516195) * on Friday February 11, 2005 @07:24PM (#11647836)
    I don't think it's "rot" that you're smelling...
  • Collapse? (Score:4, Insightful)

    by 2advanced.net (849238) on Friday February 11, 2005 @07:24PM (#11647837) Homepage
    They've got enough cash in the bank to run the business for decades if they never made another cent ... They may not be the 800lb gorilla, but I don't know how you could possible predict a collapse.
  • Uh huh (Score:5, Insightful)

    by 0racle (667029) on Friday February 11, 2005 @07:25PM (#11647849)
    Apple and Sun will be gone by the end of the year. IBM will collapse under its own weight, Nintendo will be out of business any day now, BSD is dead....

    Same crap, different company.
  • by Anonymous Coward on Friday February 11, 2005 @07:26PM (#11647859)
    They just gave away 60 billion to stock holders and still have 34.5 billion with zero debt.
  • by vlad_petric (94134) on Friday February 11, 2005 @07:28PM (#11647883) Homepage
    A company that has more cash reserves than the GNP of a couple of Eastern-European countries taken together, is gonna take a looong time to fall.

    Esp. when its flagship products are monopolies.

  • by Nom du Keyboard (633989) on Friday February 11, 2005 @07:30PM (#11647894)
    I'll belive him when...

    ...he has massively shorted MSFT.

  • by Leroy_Brown242 (683141) on Friday February 11, 2005 @07:30PM (#11647903) Homepage Journal
    Microsoft is dying, the same way that Apple and FreeBSd are Dying.

    I'd surely be socked if they did die. But I'd bet money they won't. In fact, I have.
  • by Anonymous Coward on Friday February 11, 2005 @07:30PM (#11647905)
    Indeed. Microsoft is making record profits, and you people say it's beginning to "rot?" Wishful thinking, to say to least.
  • Re:Collapse? (Score:5, Insightful)

    by Anonymous Coward on Friday February 11, 2005 @07:32PM (#11647913)
    Um, I bet the shareholders would like their money invested somewhere else if the company stopped making profit. That scenario of spending all the cash reserves to keep going for several years just for the heck of it thus isn't likely.
  • Re:Collapse? (Score:1, Insightful)

    by Anonymous Coward on Friday February 11, 2005 @07:36PM (#11647960)
    Well if you read the article you will notice that he said they would die a SLOW death like DEC.

    However you raise an interesting point, is all of that money saved in some bank or is it the investors money? if all that money comes from the stock market than a bank, then if a certain number of people with a decent set of it decide to take their investment somewhere else where does that leave Microsoft?

    (warning I really don't know anything about such things, but speculating, just observing if their money isn't theres then realistically they can't stay afloat as long as you say)
  • by reporter (666905) on Friday February 11, 2005 @07:36PM (#11647966) Homepage
    Microsoft's plight is closer to market saturation than it is to rot. Consider what would happen to General Motors (GM) if it almost wiped out all of its competitors in the automobile industry and captured 99% of the market. The remaining 1% goes to the barely surviving competitors. In that case, GM's rapid growth will slow to a crawl. That crawl would essentially be just the sales associated with replacements.

    The situation for Microsoft is somewhat worse than GM in our example. Consider Microsoft Word 6.0. Unlike an automobile that wears out, breaks down, and needs to be replaced, Word 6.0 has eternal life. It does not ever wear out. After you have used Word 6.0 for 15 years, Word 6.0 works just as well as it worked 15 years ago.

    So, you have no need to replace Word 6.0 unless you want to upgrade. For most people, the upgrade is unnecessary because Word 6.0 already has all the features that you need.

    Other software programs have the same "problem". Microsoft has so relentlessly added feature after feature to its products in order to capture most of the marketshare that most consumers now have no further need for additional features.

    The only way for Microsoft to grow is to enter into other markets. Hence, you see Bill Gate's fist print in the gaming market as Microsoft pushes the XBox. Unfortunately for Microsoft, there is no guarantee of success in markets beyond the computer-software market.

    As a side note, Microsoft will continue to invest heavily in R&D in order to enhance the likelihood of success in those other markets. I would not rule out the possibility of buying Bell Laboratories.

  • Re:Uh huh (Score:3, Insightful)

    by InfiniteWisdom (530090) on Friday February 11, 2005 @07:38PM (#11647988) Homepage
    Nobody is suggesting that Microsoft is going to fold up. Just that they won't occupy the kind of dominant position that they do today. That certainly has happened in IBM's case... remember the days when the phrase "IBM PC or compatible" was commonplace? IBM is still a very large, very successful company but they're just one of many players now instead of the clear leader. I would be very surprised if the same didn't happen in Microsoft's case.

    Just think about where it would leave Microsoft if Longhorn gets the ho-hum reception that MSN search got, and it is unable to continue to prevent PC manufacturers from shipping other OSes (or OS-less PCs) when OEM contracts come up for renewal.

    Its certainly not a stretch to see Microsoft fall from where they are. They certainly have room to fall pretty far and still remain a very profitable and successful company... just without the kind of dominance they have at the monent.
  • by surefooted1 (838360) on Friday February 11, 2005 @07:38PM (#11647989)
    ...about the Roman Empire in the time of Julius Caesar. But it took several hundred years until it collapsed.

    All empires will fall in due time. Not just MS. IBM, Sun, Wal-mart, The U.S., E.U., etc. The same thing can be said about any dominant business, technology, country, etc.
  • by Beryllium Sphere(tm) (193358) on Friday February 11, 2005 @07:42PM (#11648027) Homepage Journal
    Microsoft is where IBM was in the old days. The excitement that lures glamor-seeking job applicants can't last when you've already grown to fill your entire ecosystem. Ditto the press buzz.

    In other words, where Malone sees senility, he may actually be looking at maturity.

  • by Saint Stephen (19450) on Friday February 11, 2005 @07:43PM (#11648043) Homepage Journal
    In 15 years, employers will no longer expect your resume to be in Microsoft Word format.

    I think Microsoft will become like J.P. Morgan: still huge, still important, but not what it was.
  • Re:Collapse? (Score:2, Insightful)

    by Dasch (832632) on Friday February 11, 2005 @07:44PM (#11648048)
    They've got enough cash in the bank to run the business for decades if they never made another cent ... They may not be the 800lb gorilla, but I don't know how you could possible predict a collapse.


    I bet they said the exact same thing about Enron...
  • by Lisandro (799651) on Friday February 11, 2005 @07:46PM (#11648075)
    It will however be interesting to see if Microsoft may one day break up voluntarily into different operating units, and thrive in different areas independantly.

    I expected this to be happening arround... well, now, a couple of years ago. Microsoft has a lot of crappy products, but excellent ones aswell. Hardware is the first one thats pops in my mind, and also Games (specially after the X-Box).

    Anyway, don't expect Microsoft to collapse any time soon. Even if they manage to fuck up for years in a row, they've a cushion of pure cash to lay on for quite a while.
  • by mattyrobinson69 (751521) on Friday February 11, 2005 @07:47PM (#11648078)
    actually, wasn't the reason the roman empire fell because their armies were too thinly stretched all over the place?

    kinda like microsoft trying to move into every market it can
  • nonsense (Score:2, Insightful)

    by teh_dg (800496) on Friday February 11, 2005 @07:47PM (#11648079) Homepage

    Linux and Firefox hold the world's imagination these days, not Windows and Explorer.
    A small fraction of the computer-using world have even heard of Linux, and of those who have, a huge majority can only imagine, because they have never directly used it.

    MS have lost some of their dominance, and will lose a little more. They wont collapse any time soon, not while they have real prospect of a decent P/E ratio and not unless something really amazing comes along to do REAL harm to Windows, Office et al. Famous last words and all that, but such amazing things are unpredictable almost by default.

    MS seems to be having poor "leadership and vision" right now, these things come and go. The smell has probably been there since they moved out of Gates' garage, such things dont come and go so easily.

  • by Not_Wiggins (686627) on Friday February 11, 2005 @07:47PM (#11648085) Journal
    A company that has more cash reserves than the GNP of a couple of Eastern-European countries taken together, is gonna take a looong time to fall.

    That presumes that the people who own it would be willing to spend their "profit" to allow it to fall slowly.

    My money would be on greed and a run on the Microsoft bank when (if) the time comes.
  • by fm6 (162816) on Friday February 11, 2005 @07:48PM (#11648094) Homepage Journal
    They've got enough cash in the bank to run the business for decades if they never made another cent ...
    Which means nothing to a publically held business. If you start to screw up badly, having a lot of cash actually works against you. Your investors are not going to let you squander your assets on a business plan that isn't working. If you're a small company, your investors may well shut you down, since your assets are worth more liquidated than they could ever be as a long term investment.

    Of course, Microsoft is too big for that to happen. But "collapse" doesn't necessarily (or even usually) mean total disappearance. It more often means mass firings, loss of market share, plummeting stock price. As happened at SGI.

    Speaking of SGI, I worked there during their waning days as a graphic workstation powerhouse. When people talked about where the company went wrong, a common theme was this: Wall Street fell in love with SGI and threw money at the company. All that cash helped them avoid measuring risks carefully or look for efficient ways to do things. By the time money ran short and it was obvious SGI had to reform, it was too late to claim a permanent place in key markets.

    That's different from Microsoft, of course, since MS's pile of cash comes from their tithe on every PC sold. But the effect on corporate culture is the same. Cash can be toxic to a good organization.

  • Re:Uh huh (Score:2, Insightful)

    by Anonymous Coward on Friday February 11, 2005 @07:49PM (#11648104)
    Let me ask you, when someone comes up to you and says "I work at Microsoft" , what is your first reaction?
    Most slashdotters would probably piss their pants, since they would have to be outside of their mother's basement for that to happen. For all of the trash talking that they do, I bet most anti-microsoft slashdotters would be quiet as a mouse when face to face with some microsoft programmer.
  • Re:Collapse? (Score:3, Insightful)

    by hawx54 (858674) on Friday February 11, 2005 @07:49PM (#11648108)
    It's kind of sad when an OS company can't fail because "it has a lot of money in the bank" instead of because "its OS is actually good and people really like it."
  • Maturing (Score:3, Insightful)

    by PineHall (206441) on Friday February 11, 2005 @07:50PM (#11648119)
    Microsoft is not rotting but it is maturing. It is not as nimble as it use to be. The market has matured along with Microsoft. Microsoft is starting to go through a mid-age crisis. They can not sell more OSs and Office suites than in the past, because everyone already has them and the old versions are good enough. Microsoft is changing into a mature old company that will have a steady income but there will be nothing to get excited about.
  • by SunFan (845761) on Friday February 11, 2005 @07:52PM (#11648145)
    With 34.50B, how can they fail?

    Because they have ten years of baggage concerning security, interoperability, etc. They got to where they are by really good marketing covering up their business ethics, and, eventually, most people become desensitized to the marketing.

  • by melted (227442) on Friday February 11, 2005 @07:53PM (#11648163) Homepage
    Is lack of competition. They almost always win, either in price, or in features, or in both. In all fairness, there's no office suite on the market that would be more polished than MS Office. There's nothing to replace Exchange. There's nothing to replace Windows even, because once you move an inch away from windows your hardware doesn't work anymore.

    That creates problems for Microsoft itself. Everyone is too attached to "cash cows", they become "sacred", everyone is afraid of making big bets until it's too late. Microsoft is simply afraid to boldly innovate. They have people and money, they simply don't want to.
  • by biendamon (723952) on Friday February 11, 2005 @07:55PM (#11648182)
    It's hard to say how much monetary clout Microsoft has beyond its value on paper. Certainly, they have a lot of value in investor funds available to them, and because of accounting methods that allowed them to exclude stock option grants from their expense statements, they've been able to consistently beat earnings estimates.

    But from some perspectives, that looks like a pyramid scheme. Microsoft's single most important product isn't Windows, but Microsoft itself. Or more specifically, Microsoft stock. As long as the stock continues to rise in price, it remains an attractive purchase for investors who (rightly) see that it will continue to increase in value.

    But as soon as that stock stops rising, the investor funds will slow to a trickle, and Microsoft will be forced to survive solely on the profits from its software and the actual cash it has in the bank. Is that enough by itself?
  • Re:Collapse? (Score:3, Insightful)

    by mr_z_beeblebrox (591077) on Friday February 11, 2005 @07:55PM (#11648184) Journal
    They've got enough cash in the bank to run the business for decades if they never made another cent ...

    And they have enough sense not to. Businesses (even very wealthy ones) do business to make money. If Microsoft were to stop making money it would cease to be (as we currently know it). That money would not be used to sustain a failing business model, instead it would remind the world that Microsoft is in a position of true business agility. They could sell all their software business and reinvest and reposition themselves as a very powerful manufacturer of goods, law firm ... anything Bill and Steve et al... decided to do. But they would not make software if it did not pay.
  • Re:Uh huh (Score:1, Insightful)

    by zonker (1158) on Friday February 11, 2005 @07:56PM (#11648192) Homepage Journal
    that's the interesting thing about many large companies, they are sometimes successful in spite of themselves.

    for instance kinko's is a big printing company. they waste amazing amounts of paper (some of which can't be avoided). due to the nature of the business, there is a lot of inefficiency. problems with copiers and printers, jams, print quality issues, production error, etc. often leads to wasting inordinate amounts of paper. however for all the waste they are still successful. part of this is because they can do things that many smaller copy shops can't do, like turn around huge jobs in a very short amount of time.

    a company like ibm (as in your example) is in a similar boat. they have lots of bloat and innefficency, however they can do things that smaller companies can't. in turn, even though they may not be as efficient as they could be, they still trudge along and continue to lead in their market. my guess is that microsoft is like that too...

    btw, apple, sun and nintendo may not have as much leeway in the ways i talked about above due to their size, they have an advantage they share with ibm in many of their products in that they control much of their product base from hardware to software. this of course microsoft doesn't have other than with xbox.
  • by mr i want to go home (610257) on Friday February 11, 2005 @07:59PM (#11648222)
    No - they have a lot of assests. And "investments". In cash they are about equal with Apple. Have a look at their quarterly earnings.

    Now granted, even with that amount of cash they're not going anywhere fast. But that doesn't mean they're not "dying". In IT dying means that you're not leading - companies not leading or competing for the lead in their respective fields (processors/memory/OS/cases/etc) are as good as dead. It just they way it is with IT.

    I think many of us have known Microsoft is dying for a long time now. When was the last time they released anything truly innovative? Word 5 for Mac?

    Hell, when Apple publicly makes jokes like "Redmond: start your photocopiers" when previewing OS X, you know you're so far behind that you think you're coming first.

  • There's a curve (Score:1, Insightful)

    by Anonymous Coward on Friday February 11, 2005 @08:00PM (#11648224)
    We have all seen the curve that shows any organization starting, growing, maturing and declining. We can predict that for any organization. What we can't predict is the timing. I agree that Microsoft's next direction is downward but that could take a rather long time.

    I have just read a couple of books by Clayton Christensen, "The Innovator's Dilemma" and "Seeing What's Next". He shows that time after time an established industry giant will be blindsided by disruptive technology, fail to adapt and fall. In this case the disruptive technology is Gnu/Linux/OpenSource. Microsoft probably won't adapt and probably will decline.

    On the other hand, IBM managed to remake itself. It was the former industry giant and was nearly as hated as Microsoft. Its re-adaption was wrenching but successful. In fact IBM is doing quite well with this new disruptive technology. I won't say that Microsoft can't do that but the odds are against them.
  • Huh? (Score:3, Insightful)

    by Guspaz (556486) on Friday February 11, 2005 @08:05PM (#11648253)
    What? Microsoft is sitting on enormous cache reserves, still has a monopoly on the desktop OS market, and has many extremely successful products such as Office.

    Not to mention that the xbox is doing pretty good; while they might not make money on the hardware itself, games like Halo 2 make them a heck of a lot of money.

    Microsoft might be going through a rough spot, but since when does that mean a company is going to collapse?
  • by Lisandro (799651) on Friday February 11, 2005 @08:07PM (#11648270)
    I think many of us have known Microsoft is dying for a long time now. When was the last time they released anything truly innovative? Word 5 for Mac?

    This is all fine, but Microsoft is a company. A company is there for the sole purpose of earning money and answering with it to it's shareholders. Have you seen MS earnings lately?

    I do agree with you: they don't lead technologically, and haven't done for a while. This could get them into trouble in the long run, but don't expect it happening any time soon. From a buissnes point of view though (where they have to sell their technology, innovative or not), they're doing damn fine these days. Through shady actions of true value, but they are.
  • by sterno (16320) on Friday February 11, 2005 @08:09PM (#11648278) Homepage
    Give 34.50 billion away to stockholders? :)

    Something to keep in mind is that Microsoft has always thrived on the value of it's stock. They've paid their employees with a lot of stock incentives and because of their continuing growth, they managed to get some of the best and brightest.

    As their growth has fallen off, they have less to lure the best and brightest to their offices. They are no longer scene as a source of innovation, so people aren't going to seek them out for that. They are no longer a source of tremendous financial reward, so nobody's going there for that either. Why would you work at Microsoft if you could go to Google or Apple, companies that are still growing and innovating?

    Microsoft isn't going away anytime soon, but as the leader in the industry, their days are numbered. Their products are quickly becoming mere commodities, only sustained by their monopoly position. Nobody cares that their computer runs Windows, they only care that their software works.

    Once somebody finds a good way for people to be able to get stuff done without Windows then Windows will cease to be a going concern. At that point, Microsoft will have to compete on the same level as everybody else. Filled with bureaucrats and lacking those sparks of life that fill places like Google, they will fade from importance.

  • Right again (Score:5, Insightful)

    by jamesl (106902) on Friday February 11, 2005 @08:15PM (#11648327)
    On October 5, 2000, Mr. Malone predicted the end of Apple and the PC.

    But with falling profits and plummeting stock, and having hastened the end of the desktop PC era, Steve Jobs has put Apple again in a precarious position.
    http://www.forbes.com/columnists/2000/10/09/1005ma lone.html/ [forbes.com]

    Microsoft may have a few years left too.
  • by cephyn (461066) on Friday February 11, 2005 @08:21PM (#11648367) Homepage
    The reasons for the fall of the roman empire are varied and complex.

    the reasons for the fall of microsoft (if it is, indeed, impending) will be veried and complex.
  • by mr i want to go home (610257) on Friday February 11, 2005 @08:24PM (#11648386)
    When I write about Microsoft "dying" (and I think Michael Malone means it in this sense too) I don't mean in an Enron style of explosion. They're not moving fast - they can't achieve their goals, they are influencing what happens in IT less and less. They've become so protective of their OS in it's current form that they fail to realise that other technologies may start to supersede them.

    They know this too to some extent - hence their mad rush into a wide range of offshoots (ala XBox). They've been outflanked, and are trying to change strategies rather than developing from a solid position. In my opinion most of this comes from not embracing Open Source in some way.

    Of course they'll still be around, but Motorola is still around too and chugging along happily. They're just not out to rock your world anymore. They're a follower, not a leader. But like the man says, maybe you have to die first to be reborn. In Motorola's case this may be as Freescale. With Microsoft...who knows.

  • Re:Comparison? (Score:2, Insightful)

    by Saige (53303) <evil DOT angela AT gmail DOT com> on Friday February 11, 2005 @08:29PM (#11648425) Journal
    [don't feel like arguing about the main point right now... perhaps later if I have time]

    And the winters here *DO* suck.

    I grew up in the midwest. I've had plenty of days where I had to wear a heavy coat, gloves, earmuffs, and a scarf just to walk through the parking lot into work. I've woken up to 6+ inches of snow of the ground, still coming down, and having to go into work while sliding around on the road.

    The rain and less sunlight, while not pleasant, I find much more tolerable. Besides, a gray rainy January day in Seattle is more beautiful than a sunny clear January day in Chicago, cause there's still hills, green, water, mountains, instead of the endless concrete flatness in every direction.

    Suck is relative. It can't suck that bad, since I moved here with the intention to never leave.
  • Re:Record profits (Score:1, Insightful)

    by Anonymous Coward on Friday February 11, 2005 @08:31PM (#11648437)
    Even if they did make slightly less than record profits, that hardly qualifies as going downhill.

    Basically for all the hot air about Linux in the last 5 years, it hasn't cost MS a cent in their monopoly desktop space.
  • by bbahner (693829) on Friday February 11, 2005 @08:35PM (#11648470)
    Microsoft makes almost all of their profits on sales of XP and Office. I would argue that both of these products are adequate, but neither compelling nor great. Both continue to be successful because people must endure great pain if they try to choose any other alternative.

    Lets list the other great applications or product categories MS has pioneered since the beginning of the internet era- the early 90's:

    (sound of crickets chirping)

    Where have they completely missed the boat?

    1. The Web. If it weren't for Netscape we would all be using a closed, proprietary, for-pay MS network much closer to the old pre-internet AOL model than the public internet we have today. And since MS stole the browser market from them how much innovation has happened in the browser space? For all practical purposes - Nada! Hopefully the Firefox phenomenon will convince smart, hungry people that success can be had inovating in this space.

    2. Search. Google is kicking their butt back and forth and truly innovating on a regular basis. I never realized how piss-poor the Windows search functionality was until I tried Google Desktop Search. It is a revelation to get results immediately that would take several minutes or hours of searching to find with the MS provided pap. And have you seen the other stuff coming from Google Labs like the new Maps? Great stuff.

    3. Music. Tiny little Apple has single-handedly eaten Microsofts lunch on this one. Even though MS compatible players are (or at least were) far more widely available to consumers.

    4. Gaming. The XBox seems like a contender, but only because it has been propped up by the profits from other divisions. MS blew it in the first generation - using PC components sealed their fate - the machine was too big for the Japanese market and too expensive to make a profit on. Xbox would have tanked long ago if the division was actually dependent on making money. Switching to G5 chips may help with those issues but will consumers buy a machine that isn't backward compatible? If the PSP is any indicator, Sony has not forgotten how to make hardware that inpires lust in the average /.er. And they know how to build hardware that they can sell *for profit*. The PS3 will own the next generation just like PS2 owns this one.

    Please somebody provide a single example of something important that Microsoft has truly inovated with in the past decade!
  • Re:Record profits (Score:2, Insightful)

    by CyanDisaster (530718) on Friday February 11, 2005 @08:44PM (#11648538)
    A well run company that initially succeeds and then fails will carry on making record profits right up until it starts going downhill.

    Is it me, or does this sound a lot like 'A car will continue to coast until it stops moving'...

    Hope be with ye,
    Cyan
  • by Groovus (537954) on Friday February 11, 2005 @08:49PM (#11648564)
    So first you give credit to Ronald Reagan (and ostensibly the U.S. by extension) for playing a big part in the collapse of the Soviet Union (note "communism" has not collapsed, it's still around) - whether rightly or wrongly - and then analogize that situation to Microsoft's? Can you see the problem with this line of reasoning? Hint - it has to do with that whole monopoly thing. I'd be interested to see who you think is playing Ronald Reagan to Bill Gates's evil Soviet dictator.
  • by Anonymous Coward on Friday February 11, 2005 @08:51PM (#11648579)

    >> I'll belive him when...
    >> ...he has massively shorted MSFT.
    >
    > No, that is when you DON'T believe a journalist, or a stock analyst.


    When they put their money where their mouth is, you can believe them, but its too late to get in on the action.
  • by fbg111 (529550) on Friday February 11, 2005 @08:58PM (#11648632)
    "Now the company seems to have trouble executing even the one task that should take precedence over everything else: getting 'Longhorn,' its Windows replacement, to market. Longhorn is now two years late. That would be disastrous for a beloved product like the Macintosh, but for a product that is universally reviled as a necessary, but foul-tasting, medicine, this verges on criminal insanity. Or, more likely, organizational paralysis."

    Or, more likely, Windows, with its backwards compatability, integrated applications, and security flaws, among other design problems, is so sprawlingly complex that it is reaching the level unmanageability. IANAME (MS Employee), nor have I been, but I know they hire the best. If even teams of such people struggle for so long to produce a major upgrade to Windows, then that seems to me to be a sign that they're now dealing with an unmanageable monstrosity, rather than a sign of organizational paralysis. Not that such a distinction matters much to the author's argument, though...
  • by Anita Coney (648748) on Friday February 11, 2005 @09:04PM (#11648677) Homepage
    He's right about one thing, or should I say four. Microsoft hyped the "four pillars" of Longhorn over and over again. But the Longhorn about to be released won't have a single pillar. The irony of an OS without any support is quite telling. Microsoft simply can no longer deliver what it promises.

    It's simply too distracted. It's worried about Sony winning the living room. So it releases the Xbox (and don't forget WebTV!). It's worried about Google winning the search war. So it spends a lot of resources on its own search engine. It worried way back about AOL so it created MSN. But the problem with all of these diversions is that none of them make any money.

    Microsoft is running scared. It senses that it cannot continue getting people to upgrade their OS and Office year after year, so it's desperately trying to find something, ANYTHING to hold on to.

    Microsoft reminds me of the extremely well armed troops in the first Predator movie, shooting in every directing and hitting nothing.
  • by j1bb3rj4bb3r (808677) * on Friday February 11, 2005 @09:09PM (#11648699)
    Ronald Reagan was right, and elite wisdom was wrong. The Soviet Union was already decaying from within, and all it took was a few firm pushes (IRNMs in Europe, aid to the Mujahadeen, SDI) to help push it over the edge.

    ... and we all see where aid to the mujahadeen got us.

    The fact of the matter is that we didn't have an accurate view of the strength of the Soviet Union. Our government thought it was a lot more stable and powerful than it actually was. They were still operating on the theory of containment, not on the theory that all it needed was a 'few firm pushes'. They got lucky.
  • Re:Decades??? WTF? (Score:2, Insightful)

    by Anonymous Coward on Friday February 11, 2005 @09:12PM (#11648725)
    See the post above yours.
    They have about 60 billion in cash plus short term investments.

    Your estimate of 6 to 8 billion/quarter looks about right.

    So, it's about two years or so on cruise control without income for MSFT.

    I don't know where/how Mr. +5 Insightful came up with "decades"; but this is Slashdot, where bullshit gets modded up and the truth gets modded down.

  • by Jboy_24 (88864) on Friday February 11, 2005 @09:13PM (#11648733) Homepage
    Interesting, I picked this key statement out of the quote you provided.

    "If he was smart he'd do the same thing as NeXT. Remember, NeXT almost died, he managed to go sideways with it, establish it with a certain amount of prestige but not a lot of long-term potential, and sold it to Apple."

    Jobs did go sideways. The columnist got it wrong tho, in that he thought that meant sell Apple. But Jobs' put apple into the portable music market and online distrubution of music. When that quote was written NO big companies were getting into portible music, probably afraid of a Music Disk situation. Without that, apple would be a fraction of the company it is, and headed for disaster. Its powerbook line has stagnated, desktops are a niche machine and its home machine can't play the hot games.

    The Ipod saved all that, Malone smelt something, he just got the source wrong.

  • by Anonymous Coward on Friday February 11, 2005 @09:20PM (#11648791)
    It's nice to see somebody on slashdot that actually understands accounting. I think the myth about the $1.5 billion cut in R&D demonstrates that very few posters do.

    The way an IP company would manipulate earnings, like the quote suggests, would be to begin capitalizing intelectual property (software) as an asset. Then, instead of employee compensation and other R&D costs showing up as an expense, it would moved off the income statement and onto the balance sheet as an intangible asset. Only later, when depreciating the asset, would the cost of development show up as an expense. It would basically defer expenses to a later period, increasing short term net income.

    However, investers have learned from experience how to recognize the descrepencies between net income and cash flow that these tricks create. I seriously doubt you'd see Microsoft try this.
  • by myowntrueself (607117) on Friday February 11, 2005 @09:20PM (#11648795)
    "Legally, a corporation has the rights of a human"

    Ok, so how come a corporation can be owned?

    In the USA, for example, people are guaranteed not to be used as property under the umpteenth ammendment to the constitution -- the post-civil war one IIRC (but I didn't get the benefit of an American education).

    How is it that a corporation -- which is a legal person with rights guaranteed under the constitution of the USA -- can still be bought and sold and treated as property?
  • by brit74 (831798) on Friday February 11, 2005 @09:23PM (#11648810)
    I thought thought he meant this: If you see him begin to depreciate the value of the software it implicitly means that he has begun counting it as an asset. If MS has begun counting the software as an asset, it means they're trying to do some accounting slight-of-hand in order to make things look better. How could they carry on for years like this? By adding different software assets in different years.
  • Re:Record profits (Score:5, Insightful)

    by vsprintf (579676) on Friday February 11, 2005 @09:25PM (#11648830)

    A well run company that initially succeeds and then fails will carry on making record profits right up until it starts going downhill.

    Is it me, or does this sound a lot like 'A car will continue to coast until it stops moving'...

    Perhaps it's more like Enron recording record profits until it collapsed. I'm not saying it's the same thing, but don't believe everything an accountant tells you. Keep your guard up. Record profits don't mean much if an IT company isn't spending much on research and development and is just coasting on licensing revenue.

  • by MasonMcD (104041) <`moc.cam' `ta' `dcmnosam'> on Friday February 11, 2005 @09:29PM (#11648845) Homepage
    Gates is clearly a genius with business, but I don't think he's up to running the tech side of the company. Since he became the "chief software architect" they've been floundering.


    I think the arguement can be made that Gates appreciates a brilliant technical achievement, but he clearly has little grasp of what everyday people want their technology to do: "And with this one 75-button remote, you can control all the plasma screens in your home!"

    Contrast with Steve Jobs, who likely wouldn't be able to distinguish an efficient perl script if it bit him in the ass, knows exactly what he wants technology to do for him: let him do cool stuff really, really easily.

    The time has past when some new excel data transformation could push upgrades, or any *normal* person creams themselves over the "smart home". We're swimming in gobs of good technology, but most of it is put together poorly.

    And we've been waiting for hovercraft Jetson's cars for far too long (Ginger, anyone?) to be fooled by almost-there tech that we can't integrate into our lives.
  • by DeanEdwards22 (761579) on Friday February 11, 2005 @09:29PM (#11648848)

    There are two halves to the IT business - innovation and support. If you innovate and are successful then you are going to have to do some support. The more successful products you have the more support you need.

    Any slashdotter who has worked on a successful software project will recognise the following scenario:

    You and a few other guys hack together a cool prototype. Cool prototype becomes cool product. Cool product becomes department of cool people. Marketing, sales, 1st line support etc. But your job changes too. You're job is no longer developing cool prototypes. You are now a crucial technical liaison for a major software product. Your life has changed. You don't think of how to improve your original work. You want the phone to stop ringing - besides you've got to interview a guy for a maintenance role. Your life has changed.

    That has happened to everyone that was at the heart of Microsoft. Their life has changed. They are now maintaining an empire not building it. To be honest, global capitalism is far too complex to predict what will happen to them. Hopefully, they will adapt to their new role maintaining what they have created. Innovation they should leave to smaller hungrier beasts.

    // end ramble

  • The "smell" of MS (Score:1, Insightful)

    by Anonymous Coward on Friday February 11, 2005 @09:37PM (#11648885)
    Some observations on where MS is at...

    I work for an IT our sourcer and we are in the middle of patch hell with Windows XP, we need to constantly patch to maintain our security SLA etc etc, all I ever hear about longhorn these days is that another feature has been cut... Moral: MS is producing lots of patches and losing features. The dude is right; MS are spending more resources patching mistakes than getting ahead with the latest OS

    More people in my office use Firefox than IE. Why? Not because we were desperately looking for an alternative, but because FireFox offered a better Web experience than IE and it wasn't hard to convince even avid MS zealots to convert. How did this happen? When was the last time anything significant was done with IE? Seems it has stopped dead at v6 and new browsers were able to scratch out a foot hold with some (IMHO) fairly minor but extremely useful features. Moral: You stand still and people will catch up! I think this will happen with Office, which is an MS flagship product. I don't know who will bring an alternative to the table, (again IMHO OpenOffice isn't quite there and doesn't feel right) but I didn't see Firefox displacing IE as much as it did either. I don't expect any major advances in Office in the next 12-18 months

    MS Enterprise products are just not used with the gay abandon as much as they seemed to have been 2 years ago. SMS is a dead duck, MoM isn't being purchased they way they want it to, SQL hits the wall too soon for serious enterprise DB users, ISA is not displacing the industry leaders and is overkill as a proxy server. Exchange is the best product they have but that really relies on Outlook. As soon as someone builds a Firefox equivalent of Outlook and comes up with decent mail storage system for Linux, Exchange will have a fight on its hands. The way they are tackling the SMS and MoM problem is by wielding them together and calling it Application Center instead of re-vamping what SMS does and making them both more affordable. Recent initiatives for desktop deployment systems (WinPE boot disks etc) have required buying a ton of licenses for other MS products to entitle you to use the useful bits. The best product to come from MS in the last 12 months? AntiSpyware. (still beta) Moral: MS a thrashing around like a fish on the deck of a boat when it comes to products outside their flagship windows and office suites. If longhorn slips and office gets over taken they will have start to feel it pretty quick.

    In many area's Open Source products are the market leaders, but recently I have noticed that they are winning in a new space and MS is really behind the eight ball. I am talking about Media PC's (which I personally think are a fad that will disappear in about a year in favour of fit for purpose consumer devices). XP Media edition is hideous and the Open Source alternative just beat it to a pulp. MS don't get it at all... OK so the Open Source ones rely on you building it yourself, but you don't even have that option with Media Center, you get it with a PC and you are stuck with the crappy feature set and hideous GUI, sure its all setup and working, but I'd rather have a semi working Myth Box than a fully working piece of Media center junk. Moral: MS is getting beaten to market by open source alternatives with key new technologies that it is actually trying to compete in. Open source options are a threat because MS cant compete with the model and it can't simply buy its way into the market.

    My 2c...
  • Totally aside... (Score:3, Insightful)

    by E-Rock (84950) on Friday February 11, 2005 @09:41PM (#11648912) Homepage
    Now that firefox has some traction, it's on the radar of the asshats that target IE for their spyware and shit. If firefox is still spyware free in 12 months, it'll mean something. Otherwise, it'll probably have some massive pullback.

    The iPod is not a competitor of Microsoft, but of the people that bought into wmv.

    Did Microsoft even have a web search offering that was up against Google?
  • by ArbitraryConstant (763964) on Friday February 11, 2005 @09:55PM (#11648971) Homepage
    "In IT dying means that you're not leading - companies not leading or competing for the lead in their respective fields (processors/memory/OS/cases/etc) are as good as dead. It just they way it is with IT."

    Apple held on when their OS was obsolete, and again when their processors fell behind. They survived both. I think Microsoft can survive their current troubles, no matter how much we wish that weren't so. Hell, IBM has survived and look how bad they screwed up.

    The moral of the story is that you can survive to come back if you have a big enough wad of cash. Microsoft can survive years on their cash alone, and a lot longer than that if they start getting rid of assets.
  • by bonch (38532) on Friday February 11, 2005 @09:55PM (#11648973)
    Windows succeeded for a very simple reason. Cheap PC clones. You had "PC-compatible" computers (remember that phrase?) that were getting cheaper because they were clones, and they were appearing everywhere. Windows was a cheap and easy GUI to place on them. I still remember my first thoughts when running Windows 3.1--"Cool, this is like the Macintosh but for PCs."

    Windows is only everywhere because PCs were everywhere, and therefore Microsoft made enough money to finally release a good version of Windows some ten years later. And they're still patching it.
  • Not necessarily, here [go.com] is an article dated last year, but with a 2005 copyright footer. So, the fact that abc have done something like

    include 'std_copyright.inc'

    doesn't give much away about the date of publication in this case.
  • by demachina (71715) on Friday February 11, 2005 @10:27PM (#11649100)
    If you mean the rather high value of their stock at the time they went on the merger binge with Cray, Alias and Wavefront it probably did fuel some insanity but I doubt it was the driving factor. At the time there was a lot of merger mania and the McCracken/Jermoluk management team was not a good one. I'm guessing Jermoluk was the one mentioned in the article who forgot the meeting with Fortune. He was a partier, and a hard charger, he had some charisma and some brilliance but he was also a flake much of the time and weak on strategy and vision.

    SGI did make all the people that owned Cray, Alias and Wavefront stock rich because they bought them at a huge premium and most of those people dumped their stock right after the merger. SGI later sold both of them at huge writoffs(though they bought them with stock so it wasn't real money).

    Cray was a basket case when SGI bought them. The one era when supercomputing rocked SGI's world was when the R8000 came out. It was revolutionary in having a lot of floating point and I/O in a cheap multiprocessor machine. It totally wiped out the bottom end of Cray's market. It was rumored at the time the government may have coerced SGI in to buying Cray because they didn't want Cray to go under because they were a still a strategic asset to the U.S. and certain agencies.

    Unfortunately the one high value asset Cray had in the pipe was in a partnership with SUN, (what was the name?) Starfire, E-10000, something like that. Unfortunately SUN held the rights to it when SGI/Cray merged and it proved to be a raging success for SUN and totally hammered SGI in the HPC market right after the merger. It was irony that SGI got the smoldering ruin part of Cray when they bought them and SUN got the one Cray product that rocked, though its was SPARC based so SGI couldn't have made it work whatever.

    SGI plunged into supercomputing partially because the R-8000 was such a success but they never matched that success in any subsequent product. The R-8000 totally messed up the MIPS road map because it was all floating point and no integer so it sucked in their workstation market. R-10000 was mediocre in both integer and floating point so wasn't a raging success in either. IA-64 is back to the R-8000 model great floating point on vector Fortran code but sucking wind at everything else. SGI can't win now because they have no viable CPU strategy at this point other than beg IBM for theirs or maybe jump on the 64 bit AMD bandwagon but I imagine their partnership with Intel precludes that.

    It shold also be noted there was also a massive culture clash between the SGI and Cray camps after the merger, like there often is. They fought like cats and dogs, and knifed each other in the back at every opportunity, often in front of customers. It was a complete disaster of a merger and hastened SGI's demise.

    As I recall Ed McCracken and Tom Jermolak were completely awed by the Cray name and all that impressive looking big iron and they bought the company using their dicks to do the thinking instead of their brains.
  • by Aeron65432 (805385) <agiamba.gmail@com> on Friday February 11, 2005 @10:39PM (#11649162) Homepage
    Consider this. They have a monopoly (the Justice Department has said so) They have $55 BILLION dollars in CASH. To take an example, American Airlines lost about 300million this year. At this rate, Microsoft can keep on kicking for 183 years. And this is a bad scenario. If companies like Dell continue to patronize them, Microsoft will continue to post profits. As much as /. may want it, it probably won't happen. At least until we are dead.
  • by Anonymous Coward on Friday February 11, 2005 @10:39PM (#11649164)
    The markets don't really need to grow given that they give a consistently high income every release. If Microsoft were selling static products that were never replaced this might matter, but Microsoft literally controls the business document and operating system sector. The lack of growth isn't a sign of weakness, it's a sign of total saturation. There simply is no emerging market for them to capture.
  • by Tamerlan (817217) on Friday February 11, 2005 @10:51PM (#11649220) Homepage
    Not necessarily. Look at TiVo, which is a pioneer of DVRs, its name even became a verb. Tivo is screwed up [gigaom.com]. Now look at Dell. Nobody in good mental health would call Dell innovative. However is Dell is leading PC market and having a good piece of server market.
  • by Jeppe Salvesen (101622) on Friday February 11, 2005 @10:54PM (#11649231)
    Microsoft has as far as I understand two cash cows: Microsoft Windows and Microsoft Office.

    Now both of those are being challenged by open software.

    Microsoft Windows is being challenged by both Linux and Mac. Windows is still king, but Mac is gaining popularity and Linux is becoming ever easier to use. I think Windows will lose substantial market share over the next 3 years or so.

    Microsoft Office is also being challenged. Open Office has come along nicely. A main threat here is the fact that users don't use more than a few percent of all the functionality within Microsoft Office. They pay for stuff they don't use or need. Once Open Office comes with some really slick templates and default fonts, I bet it will gain popularity. I think Open Office will start stealing license money in the not too distant future. The 2.0 release is coming up, and then that will become really good after a few minor updates.

    Once profits decline for Office and Windows, Microsoft will lose a lot of its current freedom to waste money. They will need to be more focused. Given the impression they have a nasty case of infighting already, this focusing will not happen. They will instead continue to decline.
  • by drooling-dog (189103) on Friday February 11, 2005 @10:55PM (#11649238)
    We see lots of things that tend to loosen up MS's chokehold on the industry.

    This shows up in a lot of subtle ways. As the MS/OSS war for hearts and minds rages on here on Slashdot and elsewhere, I wonder how many of the MS partisans realize how much more difficult it would be to deal with Redmond in the absence of the Open Source threat? They are benefitting hugely from OSS even if they're not using it directly themselves.

  • by iroll (717924) on Friday February 11, 2005 @11:21PM (#11649325) Homepage
    During the Reagan years, Richard Nixon wrote a book entitled "1999: Victory Without War" in which he predicted that the USSR was changing, but fundamentally stable enough to survive. I hardly think of Nixon as a posterboy for the left-elite. I also think you give Reagan way to much credit; it's easy to say "Oh, he meant that all along" after the fact. There isn't any more reason to say that Reagan "was right all along" because things worked out the way they did than there would be when somebody sinks a 100' basket over their back, accidentally. You've got just as much evidence of his 'genius' as I do of his 'insane luck;' the real truth lies somewhere in the middle. He had some evidence to suggest that the Soviets were in trouble, but he was also a pure and simple hawk, crusader, and paranoiac.
  • by mabhatter654 (561290) on Friday February 11, 2005 @11:38PM (#11649409)
    The "magic" of Open source is that essentially MS has "completed" it's self-proclaimed goal of delivering computing to everybody. now that they've fufilled that goal the only thing left is to "take over the world" but that's not really possible. Basically all they sell is "information" and it's not incredibly earth shattering any more.


    MS is in the same position as IBM was in 1990. Bill's whole fortune is built on marketing the next big MS "thing". That's the dirty little secret of the whole MS success. They make lots of money but in the grand scheme of things they've squandered most if it trying to "take over the world". Bill's absolute worst fear is to be "IBM'd" [IBM is still really powerful, but they're not "cool" anymore. Steve Jobs & apple on the other hand, are basking in "coolness" right now!] MS will always be a multi-billion dollar company, but if they have to play by "normal" business rules they won't be movers-and-shakers anymore...the whole stock scheme will crash. When that happens, Businesses will start looking at things like licensing, performance and cost of software... When MS' bubble pops. The "golden glasses" will come off alot of people and MS gold will tarnish fast. That's why they're so intent on doing like IBM and creating a position to be the "gatekeeper" of technology...the Wall street loves companies with a "lock" on the market.

  • by Anonymous Coward on Friday February 11, 2005 @11:58PM (#11649484)
    When you stand back and look at the entire history of MSFT on a single graph, one feature stands out.

    Something happened in early 2000, before that peak, their price made a steady upward progression with barely a setback. During this time the volume of shares trading steadily increased.

    After the peak, the price drooped, staggered around a bit and then levelled out at about half the peak price... never to recover its former glory. BUT the volume of trade has INCREASED, and 2004 saw some of the highest volume of MSFT trades in the history of the company. In other words, the whole share trading pattern has shifted into a different mode.

    To me this says that during the steady climb before 2000, people who owned MSFT usually hung onto them. After 2000, people have been much more willing to sell. The shares are in the process of being "handed over" to a different class of investor.
  • Re:Uh huh (Score:3, Insightful)

    by freemacmini (852263) on Saturday February 12, 2005 @12:08AM (#11649522)
    I once met an MS employee at a bar. I turned around and left.

    I had no desire to become involved in a conversation or to become friends with anybody who works at MS.

    Yes it's probably prejudiced but that's the way I felt.

    I just perceive them as being unethical people working for an unethical company. Look at the way MS has stabbed so many of its friends in the back, who is to say an MS employee won't stab his friends in the back too?
  • Re:Huh? (Score:3, Insightful)

    by mav[LAG] (31387) on Saturday February 12, 2005 @12:31AM (#11649625)
    Microsoft is sitting on enormous cache reserves

    Maybe they should stop sitting on them and get them into CPUs where they're needed :)
  • by rbanffy (584143) on Saturday February 12, 2005 @12:43AM (#11649670) Homepage Journal
    Windows (and Microsoft) succeeded because it gave users what they wanted and needed. They needed a cheap and backward compatible GUI instead of Macintosh or OS/2, and they got Windows 3 (after a couple less successful iterations). The only ones that were not satisfied were Mac and OS/2 users. Users needed simple networking for sharing files and printers as opposed to NetWare or Lan Manager, and they got Windows for Workgroups. They wanted applications that looked consistent with the rest of the GUI, and they got Word, Excel and, later, the Office suite.

    At that time, Apple was evil - they had cute computers, but they were overpriced and incompatible with everything else. IBM was evil too - pushing OS/2, incompatible with just about every application written up to that time and with the added FUD that it would run best on the overpriced PS/2 family.

    People used to talk about the next version of whatever that came from Redmond - How Word would handle tables better or how Visual Basic (and being able to quickly develop simple business apps was a major factor in Windows' acceptance) would simplify accessing databases or what new widgets people would be able to use.

    It is not so anymore. Nobody is really excited about Longtime^H^H^H^Hhorn (well... I am not), MSN Search or the next release of SQL Server. Can anyone tell me what changed between Word 2003 and Word XP? The XBox gaming console seems to attract more attention than the next release of Office.

    IBM used to be boring. Now Microsoft is. They have grown predictable and slow.

    They may not be dying, but they are sure losing steam.

  • by demachina (71715) on Saturday February 12, 2005 @12:45AM (#11649676)
    I suspect you are reading more in to the options thing that is really there. You see taxation and regulation is running against options and in favor of dividends at the moment. Options used to be practicly free money to hand out in previous years, but there is huge pressure now for companies to account for options since they dilute the value of shares owned by shareholders who bought them and previously were largely unaccounted for. Executives in particularly were massively abusing them to give themselves windfall profits, even if they weren't performing.

    If you are a Microsoft employee I imagine you are maxing out your stock purchases lately and wanting cash bonuses to buy more stock.

    You see, Microsoft paid out a $3 dollar dividend in December. It single handedly raised average income [cbsnews.com] in the U.S. by 3.7% in December, without the dividend it would have been 0.8%. Though it should be noted that is an average, chances are the lion's share of it went in to the pockets of a few people, Gate's, Balmer, Allen, etc.

    You see the Republican's passed a dividend tax cut in 2003 I think it was. I'm a little hazy on it but I think the tax on dividends is 0% at the moment. Just remember that if you work for a living when you see all those massive deductions out of your paycheck you can't escape. If you make $30K a year you are still probably paying 30% in withholding and payroll deductions. If you're Bill Gates at the moment you can pay billions of dollars to yourself in dividends and pay almost no taxes. Here [cnn.com] is what Warren Buffet had to say about it when the Republicans were shoving it through.

    The Republican argument was dividend taxes were double taxation, because the company paid taxes on it when the money was made and it was unfair to tax it again when it was paid out as a dividend. The little catch they didn't mention was big corporations exploit so many loopholes in the tax code, and take advantage of so many shelters they often don't pay any taxes in the first iteration.

    If you were to go the options route you would pay a big chunk of the windfall of cashing them in capital gains taxes, not as much as you used to but a lot, compared to the 0% you pay on dividends at the money. Its pretty rare in the country to be able to make money and not pay any taxes on it. Bill Gates is not stupid, its pretty obvious now is a GREAT time to dole out all that cash in Microsoft's coffers as dividends, tax free. The dividend tax returns in 2007 though Little George is no doubt going to push to make the cut permanent.

    Much of the recent economic "prosperity" is being pumped by tax policy that is letting the wealthy make out like bandits. The current tax code is a huge economic stimulus and that is good to pull an economy out of a recession. It is bad because its leading to huge deficits, and it is MASSIVELY unfair to working people who are getting chump change for tax incentives while the rich are harvesting huge windfalls, some of which they may reinvest in the U.S. and U.S. jobs, much of which is probably being invested in China, India, etc. or being blown on luxury goods.

    You can sure tell when Republican's have complete control of things, because it is TOTALLY sweet to be a wealthy shareholder and it totally sucks to work for a living. The amazing thing is millions of working people who are being totally screwed by the Republicans, economicly, keep voting for them anyway. Republicans have some true genius, because they can sucker working people in to voting against their own economic interest by using wedge issues and scare tactics like terrorism, gay marriage, abortion, religion, etc.
  • by saddino (183491) on Saturday February 12, 2005 @01:02AM (#11649743)
    The collapse has been evident, and although it's surprising to see someone go out on a limb, I think those in the know have felt the tide turning for a while:

    1) Stalled growth. The stock price has flattened. MS has thrown out dividends to keep investors interested, but the stock is played out.

    2) Tapped markets. Financials show a disturbing trend: the only operations in the black are the Windows and Office units. Despite relentless spending in R&D, acquistions and experimental to expand their market (MSN, WebTV, etc.), nothing seems to pan out.

    3) Apathetic customers. Inability to move entrenched (NT, 95, 98, ME) users, especially business users towards new products. The threats to drop legacy OS support have always ended in retreat -- and for a company as powerful as MS, those actions betray their ultimate dependence on Windows sales to stay alive.

    3) Longhorn. For a company that makes so much of its money in OS sales, the inability to deliver a next-generation OS on time and as promised (Avalon, Indigo, WinFS moved out either to bolt on to XP or "for the future") is not an indication of engineering failure, but instead management failure. MS is too large to turn on a dime anymore.

    4) Security. This is the death knell, and truly the slippery slope that Apple and the Linux community will use to the most advantage. If you can't get your customers to upgrade to a faser OS (see 3), then you're doomed to see them suffer the fate of today's spyware, malware, trojan and virus ridden reality.

    5) Dubious "initiatives." IPTV? Tablet PCs? Wired watches? Again a management failure. Someone needs to keep their "visionaries" on an even keel.

    And you can add to this list for a long time. Do one or two of these things signify the end of MS? No, but the trend is clear and the "end of MS" meme is gaining momentum. MS has finally become IBM of yesteryear. IMHO, their pathetic "grasp" at Google's share makes this clear.

    When a company throws the term "innovation" around like rice at a wedding, you know that's the thing they're most nervous about.
  • by SunFan (845761) on Saturday February 12, 2005 @01:22AM (#11649816)
    They've become so protective of their OS in it's current form that they fail to realise that other technologies may start to supersede them.

    May? It's already happened at the kernel level with Solaris 10 and at the desktop level with Mac OS X. Windows is second-rate, now, and the only thing Microsoft really has is Office. The only reason they can keep a hold on Office is their file formats.

    So, Microsoft is stuck in a middle place of sorts between Solaris on the servers and Mac on the desktops. Now that Linux and OpenOffice.org are aiming squarely for that middle place of sorts--but more cheaply--sort of leaves Microsoft in a perilous position, IMO.

    I think the bricks will start falling in force in Asia, where localized Linux desktops with OpenOffice.org are getting popular. For a time, Sun even claimed to be the world's largest distributer of Linux due to a single contract with the Chinese government. People try to downplay OpenOffice.org's significance all the time, but it is truly a brilliant strategic move against MS Office.

    The bricks will fall last in the USA, where the "PC revolution" started earliest and has the biggest entrenchment. Thus, it will probably be hard to tell from U.S. media outlets what is really happening--the real news will be from overseas.
  • by BasilBrush (643681) on Saturday February 12, 2005 @02:15AM (#11650013)
    You missed out the end of the scenario.

    ...Your life has changed. You resign and form a startup and with a few other guys hack together a cool prototype. Meanwhile back at the original company the newbies that now maintain the product are scared to touch anything because they're not sure how it works.

  • by BasilBrush (643681) on Saturday February 12, 2005 @02:21AM (#11650029)
    Apple didn't get where they are today through holding on through the black times. Apple had black times because they sacked the CEO that had all the ideas, and re-emerged from the black times because they hired that CEO back again.

    Microsoft is beginning to rot with it's founders still there. They don't have a Steve Jobs to bring back.

  • Re:Uh huh (Score:5, Insightful)

    by Brandybuck (704397) on Saturday February 12, 2005 @02:22AM (#11650031) Homepage Journal
    Everybody who works at MS in any capacity shares in the responsibility for their corporation does.

    What has Microsoft done that other small and large corporations don't also do? Nothing. Proprietary software and nasty EULAs? A dime a dozen! Exclusive OEM contracts? De rigeur! Bundling? Everyone who can does! The point is, if you're going to insult someone who works for Microsoft, then you might as well snub others for working for Apple, Sun, IBM, Philips, GE, Verizon, Dow, Monsanto, etc, etc. Before you know, you won't even be able to walk into a bar for fear of meeting someone.

    I'm glad you're perfect. Standards are great, and the higher the better. But place them on yourself not others, or you'll live in a very lonely world.
  • It Isn't Rot (Score:3, Insightful)

    by ThisIsFred (705426) on Saturday February 12, 2005 @02:29AM (#11650046) Journal
    But maybe he caught a whiff of the stagnant air. I seriously doubt Microsoft is about to collapse, but they've saturated their target markets. They have prevented any competition from getting a successful footing in the OEM market, they hold captive the majority of developers who write click-and-drool stuff for casual users, and they've sort of levelled off their sales in the low-end server market.

    That's great, but in their current position, all Microsoft can do is sell upgrades to the stuff that people have already bought. That's probably just fine for keeping the cashflow coming in on a regular basis. It's kind of naive to expect Microsoft to continue expanding, and expect a big jackpot from rising stock value.

    I'm not worried. When Microsoft's mistakes hit 'em in the pocketbook, they'll change in a hurry.
  • by MillionthMonkey (240664) on Saturday February 12, 2005 @02:39AM (#11650073)
    The Republican argument was dividend taxes were double taxation, because the company paid taxes on it when the money was made and it was unfair to tax it again when it was paid out as a dividend. The little catch they didn't mention was big corporations exploit so many loopholes in the tax code, and take advantage of so many shelters they often don't pay any taxes in the first iteration.

    You don't even need to mention a "catch". This argument was always stupid on its face. This cartoon [salon.com] explains all you need to know about what people mean when they refer to "money being taxed twice".

    Money is taxed an indefinite number of times, whenever it moves from one hand to another. The idea that this should not apply when one of the hands belongs to a wealthy individual is quite new.
  • by lightknight (213164) on Saturday February 12, 2005 @02:50AM (#11650101) Homepage
    To say that because the lions share of a certain type of payment goes tot he richest few means it shouldn't be taxed makes me so angry I want to punch something.

    To say that some bureaucrats in Washington DC have any right to my income makes me so angry I want to punch something.

    The government pays people with their own money. It doesn't create any wealth.

    I mean, the way the system is setup now, it is really no different than that of the medeival age. The president is our king, Congress are the dukes, barons, and princes, and the Supreme court is the clergy (who are always reinterpeting our most sacred documents). Anyone who isn't a politician is seen as a citizen, to be taxed at the will of the royalty. I dare you to say otherwise.
  • Re:Uh huh (Score:2, Insightful)

    by Moofie (22272) <lee@@@ringofsaturn...com> on Saturday February 12, 2005 @03:42AM (#11650256) Homepage
    "What has Microsoft done that other small and large corporations don't also do?"

    Illegally abuse their monopoly.

    "But place them on yourself not others, or you'll live in a very lonely world."

    I don't owe my friendship to anybody. I choose to surround myself with good people. I don't really think it's possible to profit from Microsoft's illegal business practices and be a good person.

    I agree with the person who turned around and walked away.
  • by citog (206365) on Saturday February 12, 2005 @04:36AM (#11650384)
    What you're saying reminds me of something that Warren Buffet said. I'm going to paraphrase here, probably badly. He was saying that when he heard the 'man on the street' talking about getting into a particular stock because that man heard it was the next great thing that's the time to get out. Now I'd be surprised to see Microsoft go down the pan quickly. But, if the institutional traders are letting their shares go into the hands of small investors then MS is probably stagnant and not a good investment.
  • Re:Collapse? (Score:1, Insightful)

    by Anonymous Coward on Saturday February 12, 2005 @05:04AM (#11650463)
    Yes, they own a lot of stock: that makes Ballmer and Gates one of those investors who are very much interested in not making a loss. They didn't make their fortune by wasting billions on foolish pride.
  • by jschoenberg (828313) on Saturday February 12, 2005 @06:06AM (#11650623)
    When predicting a quick demise for Microsoft, people might be forgetting about the corporate environments that run Windows. There is a great deal of money in this market, and the revenue from these environments will not extinguish very quickly. Most companies in the world use the Microsoft operating systems and office productivity applications. There are very few that have gone MS-free, and those are easily overshadowed by the number of companies that run only Microsoft servers and clients. Many of the largest companies in the world also invest in developing solutions based on this platform, such as Sharepoint portals, Infopath forms, sales automation applications in Outlook and on and on. A lot of companies make at least a few investments in simple Access database applications or SQL servers. Even if most of these companies decide to ditch Microsoft, how long do you think it will take for these companies to migrate their workflow applications? How much money do you think it would cost to roll out a Linux OS to all their clients? How much would it cost in retraining to teach someone how to recreate their Sharepoint portal? How many companies are prepared to spend the huge sums of money and time it would cost? Even if investments are justified, somehow I sense that this would not happen quickly. Its much more likely that slow movement would happen, which may be the best news of all for Microsoft. Because in the next few years, Longhorn and its associated technologies may make the OS arguments moot by outpacing the Linux development effort and providing features that simply won't be offered in the Linux available when Longhorn ships. In my opinion, huge teams of very good and highly paid developers (MS) will come up with better feature lists than smaller teams of passionate expert developers that are writing code in their spare time for no money (OSS). True, the code may be better thought out and more elegant with OSS (heavy peer review), but for office process automation, features are what drives the business to buy the software solution, not elegant code. If the features of Longhorn are persuasive to the enterprise customers of Microsoft (again, far and away, most companies in the world use Windows), quite the opposite of what the author proposes will happen. Another round of enterprise purchases of Microsoft servers and record profits continue. If not, what the author proposes will not happen either, until most companies have completed a long and painful migration of business process and technology.
  • by Nossie (753694) * <IanHarvie@@@4Development...Net> on Saturday February 12, 2005 @06:19AM (#11650657)
    can you maybe relate super computers to Formula1 racing? After reading your post I had this thought and they seem quite similar...

    Large companies spend millions to get into F1 racing, and hardly make a profit. Their prestige on the other hand sells their 'normal' range of cars and although within a couple of years they will be replaced at the top... since everyone has seen ferrari race like a bandit, they all want one! IBMs name sells servers and (used to be) Personal Computers this way.

    F1 cars like supercomputers innovate industry but since only big governments and a handful of racing teams can afford them the market demand is tiny. the profit margin is even smaller

    Supercomputers like Formula 1 cars are high mantenence in terms of reliability and also require special tools and experience to fix.

    Once you run out of that innovation... everybody else in the bigger market below catches up. nobody wants to pay 100k for something you could get for 2k whither its a 180mph sports car, supercomputer, graphics card or windows license.

    Sad reality as a parent suggested is that SGI no longer has the huge edge in terms of cpu and gpu markets. But if you have enough R&D/love to develop something fantastically new (apple) then you can rise to the top again and live back in a niche market.

    I dont think Microsoft could live in this market these days, they have to sell big, fast and to lots of stupid people. The people might not be any brighter, but even they would rather be screwed by someone else. SGI I believe only have to do something that puts them in front of Sun & IBM to get back into the leading market and be king again. The Supercomputer market has so few players that you only get forgotten when you run out of both innovation and money.

    Although Apple may have done this with the ipod, their operating system and processors will take years of catching on and marketing before they are close to the scale or Microsoft.
  • Re:Comparison? (Score:2, Insightful)

    by Anonymous Coward on Saturday February 12, 2005 @06:25AM (#11650673)
    Somehow it does remind me of the cold war days, MS being the USSR simply because its closed, considered sinister, has a big arsenal, and has citizens who want to emigrate.

    Actually, if you're going to map MS to a geopolitical power, it'd be the United States:
    - everyone envious of its power, wealth, and success
    - everyone forced to deal with it in some way: it's products and policies are ubiquitous
    - lots of rhetoric about how they stand for the good good of all
    - lots of skepticism to that rhetoric
    - tremendous double standard in its policies vs its reactions to the policies of others
    - very little ability to rebut their authority and dominance through legitimate means
    - very little concern internally over what everyone else thinks of them

    I don't even think you have to go back to the cold war. Whenever I'm around intelligent, educated folks from other countries, taking patently pro-USA positions gets you exactly the kind of funny, quizzical looks you get from intelligent, experienced engineers when you tell them you love Windows.
  • by fymidos (512362) on Saturday February 12, 2005 @07:16AM (#11650853) Journal
    >having 1/10th of a TRILLION dollars in the bank
    >before the large dividend

    actually this was the first sign. They had 80 billions in the bank, why didn't they throw 20 billions in R&D to get loghorn out in time ??? Instead they lost 4+ billion trying to get a piece of the home entertainment market with xbox.

    The stock is stagnant because the whole company is. There is absolutely nothing exciting going on in redmond these days: When linux started gaining market share their reaction was to double their marketing budget, as "their message wasn't coming through". Not R&D budget, *marketing*. And it's getting worse. They are still cutting R&D expenses, while loghorn is 2 years late. A company that is run by accountants IS rottent in IT industry.
  • For instance, when starting a business project, where is the OSS feature for a complete novice to create a Sharepoint portal with Outlook integration, RSS feeds and an Infopath form that connects to a SQL database?

    You may consider this strange, but I can't think of any reason why anyone would actually want to do all this gobblygook, except maybe because MS marketing told them they should. This sounds like a complete waste of time and effort, for the assets involved in constructing it, those required to maintain it, and the poor people forced to use it afterwards.

    Like the 200-or-so access and excel-based application nightmares that I've been asked to remove and build replacements for, strapping wizards, buzzwords and day-glo colors onto a hunk of technology doesn't magically give application development to the masses.
  • creating wealth (Score:1, Insightful)

    by Anonymous Coward on Saturday February 12, 2005 @09:01AM (#11651091)

    The government pays people with their own money. It doesn't create any wealth.

    I beg to differ on this point. The government absolutely creates weath, but it does so indirectly.

    Government spending in education is an investment in the future of the nation. Defence spending, at its best, maintains the rule of law so that business can thrive. Transportation spending ensures there are maintained roads for packages to traverse. Compare these points to a developing nation that has no similar spending. I think it's clear that the actions of the government create weath for its constituents.

    Furthermore, when you suggest that taxes are just payment to royalty, remember that we are taxed precisely at the rate we request. The current leadership in Washington is tax averse, and they didn't get there just because some mystery elites wanted them there. If the citizenry decides that no taxes are best, we can vote for that change.

    If and when that happens, though, I'll probably move out. What good is a country that cannot invest in its people?

  • Re:Record profits (Score:3, Insightful)

    by Casualposter (572489) on Saturday February 12, 2005 @09:13AM (#11651129) Journal
    I'll apply the so what argument to the billions spent on research. What has Microsoft developed? Just because R&D is funded doesn't mean that anything useful comes out. I've heard of the products of Apple R&D (this comes as a product: itunes, ipod etc) but what about MS? R&D spent to develop a copy of someone else's already sucessful product? Another search engine? Another music site? Another game plateform? Articles come out about the new innovative chip set that Playstation will use. We crack open an XBOX and its based on off theshelf technology. That's not research and development that's reverse engineer and copy. So MS spends billions on R&D and gets what? Someone else's product done less well? It takes a long time to do fundamental, innovative research and development. MS has some flaws that prevent it from ever doing good R&D leading to useful products: the customer is always last and monopoly is always the goal. That's why when MS comes out with a product, it aint the best thing ever in the customer's eyes. they don't think it has to be, because they intend on gaining the monopoly and forcing you to buy their stuff.
  • by Anonymous Coward on Tuesday February 15, 2005 @02:10AM (#11675300)
    No, they are attacking us to convert us to Islam and to punish us for being infidels and not obeying shari'a.

    If you believe that, you probably also believe that we invaded Iraq to disarm it. The excuse to attack someone is seldom the actual reason.

    We've seen events like 9/11 in the past several hundred years on many occasions, sponsored by Muslem terrorists.

    What else happened in the last hundred years? Hm... the holocaust (perpetrated by Christians), the troubles in northern ireland (christians), the detonation of an atom bomb in two civilian neighborhoods (christians), the croation extermination camps (christians), the 1994 Rwanda massacres (christians)... the rampant molestation of young boys... the list goes on.

    Read some history before you claim that one religion is so vastly superior to another. Millions of people have been killed in the name of religion (even though generally something else is the real reason), and christianity is bloodier than Islam by far.

    If the people in the middle east were christian, we'd have just as big a problem, probably bigger, than we do now. Go read a book or two, then try again.

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