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Microsoft: The Faint Smell of Rot 903

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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  • by fembots ( 753724 ) on Friday February 11, 2005 @07:24PM (#11647832) Homepage
    This kind of "insight" can be applied to almost every company, and it's about as good as Colin Fry's cold reading ("wait, I think I smell something back there...").

    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.
    • 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 ChatHuant ( 801522 ) on Friday February 11, 2005 @08:00PM (#11648229)
      This kind of "insight" can be applied to almost every company, and it's about as good as Colin Fry's cold reading

      Looking for previous Malone predictions I found this gem where he predicts the death of Apple. I quote from the full article []:

      "No, I think that if Jobs proved anything, it's that the core body of Macolytes is pretty inviolable. It would be very damn hard to lose them. The question is: Can he do much more than he's done right now? He's up against 300 companies. No matter how clever he is, the combined creativity and brainpower of 300 companies ultimately will defeat him. He didn't believe that the first time around. I think he knows that now. That's why I think he's positioned Apple for the big exit. I suspect he's shopping the place around. I hear rumors to that effect but I couldn't confirm them. 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. He ended up being a hero, but he came within weeks of being a goat. If he can sell Apple and make a ton of money, then he becomes the savior."
      • 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 phriedom ( 561200 ) on Saturday February 12, 2005 @02:40AM (#11650074)
          " When that quote was written NO big companies were getting into portible music, probably afraid of a Music Disk situation."

          I suppose we can disagree on what a "big" company is, but there were plenty of MP3 players on the market when the iPod came out. Creative, you know the guys that made all those SoundBlaster cards that were the de facto standard for computer sound seemed to be in a much better position than Apple was to take over that market.

          Of course that just makes Apple's success that much more remarkable. It wasn't that Steve Jobs had that fantastic vision of a opportunity no one else saw, it was that Apple had by far the best design and won over the early adopters and marketed the whole thing brilliantly. Anyways I'd say the odds were probably a 100:1 that Apple succeeds in that sideways move into digital music, so faulting Malone for not seeing that one coming isn't fair. If the cards had fallen a little bit differently maybe that sideways move would have been the sale of Apple.

          100:1 might be a bit generous actually. The Creative player had more capacity, worked with PCs so there was a much bigger potential customer base, had cheap removable batteries. The iPod was a little bit smaller, had The Wheel, and cost about $100 more. That business model doesn't make any sense. Well, at least it doesn't make any sense until it works.
  • Collapse? (Score:4, Insightful)

    by ( 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.
    • 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.
    • 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.

      • by demachina ( 71715 ) on Friday February 11, 2005 @08:44PM (#11648534)
        Kind of a grandiose assessment of SGI's demise.

        The were doomed about the time Jim Clark realized the PC's and Windows had come far enough along that they were going to rule the world, and thanks to their economy of scale, low margins and fast product cycles proprietary workstations were doomed.

        Clark then preceded to start telling everyone at SGI the bad news, it hacked off Ed McCracken among others, they forced him out and they lost their visionary. He went on to make a fortune on Netscape on the PC, SGI meanwhile had no vision and started spiraling in.

        A major disruptive shift was occuring in the market, the visionary saw it, everyone else at SGI refused to see it. At the nexus was the first Windows NT release, the Pentium Pro, single chip graphics engines like Glint and Voodoo(today Nvidia and ATI), oh and Microsoft bought Softimage and made them port to the PC at which point everyone realized expensive 3D workstations were dead, everyone except the people at SGI.

        If I recall correctly Pentium Pro was the first chip with some of the fruits of Intel's outright theft of Digital's Alpha architecture at which point IA32 started to not suck for the first time. If you recall Intel partnered with DEC with the idea of adopting at least part of Alpha. After they looked at all of the Alpha's inner secrets, they backed out, used all of DEC's IP anyway and it caught Intel up with RISC. DEC won a court case over it a long time later but by then the damage was done and Intel was rewarded handsomely for thievery.

        At the same time SGI was rushing in to the supercomputing market which isn't a market that has ever or will ever sustain a fast growing company. Its a quirky market, where you survive on good will, whims and largesse of the U.S. government, which is pretty much the only thing keeping SGI alive today. 9/11 probably saved SGI from bankruptcy because they can live on the big surge in Defense and Intelligence spending, building high end systems that almost no one but the government will buy.
    • Re:Collapse? (Score:3, Insightful)

      by hawx54 ( 858674 )
      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."
      • 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.
        • by glsunder ( 241984 ) on Saturday February 12, 2005 @12:34AM (#11649636)
          Dont forget, windows and dos succeeded because it was free for home users. Not legally, of course, but windows and dos were pirated like crazy. Guess what it got them? Marketshare. They sold it in the workplace, but won it in the homes of the hobbiests.

          They killed/buyed off the competition. Guess what, along comes a competitor that can't be bought or killed off. And it's take the effective part of MS's early strategy one step further. MS doesn't know how to fight it.

          The market created a competitor, or put another way, a competitor evolved much like a bacteria in the presence of antibiotics. MS's traditional pills dont work anymore, they've killed off what they could, allowing what remains to have room to thrive. In a way, MS created modern OSS.
    • by jgardn ( 539054 ) <> on Friday February 11, 2005 @07:55PM (#11648180) Homepage Journal
      You've forgotten the reason why Microsoft existed in the first place: To *make* a lot of people a heckuva lot of money.

      If Microsoft sees no future in its business, it will liquidate its assets and pay off its investors. Sure, it has billions, but if it can't find a way to turn those billions into trillions, then it will be sold and the capital invested somewhere else. This is the core of capitalism.

      Companies are the sum of its investors, and nothing more. They can come and go pretty much as they wish. What do you think "corporation" means? It means something made out of many parts, those parts being actual people and their fortunes.

      Companies don't collapse. They are abandoned. That is what is happening to Microsoft *right now*, and he sees it.
    • 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 l
      • You realize that this is a company that books something on the order of 1 billion dollars a month in profit right? I know it used to be 1 billion dollars a quarter, but not too long ago, I'm fairly sure they posted 12Billion dollars in a single fiscial year.

        I'm not sure what their operating costs are (I believe it's something just insanely low once you remove their research costs). Yeah, I'm fairly confident they can stick around once the pyramid scheme collapses.

        By the by, I've been told the the pyra

    • Re:Collapse? (Score:3, Insightful)

      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 r
    • Decades??? WTF? (Score:5, Interesting)

      by brunes69 ( 86786 ) <slashdot.keirstead@org> on Friday February 11, 2005 @08:59PM (#11648640) Homepage
      Microsoft's total cash on hand is 34.5 billion. Their operating costs average around 6-8 billion a quarter. By my math, that means they could operate for anywhere to 1-1.5 years without taking in any revenue, unless they *seriously* scaled back their business ventures.

      That is quite far from "decades"

  • 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.
    • Re:Uh huh (Score:5, Interesting)

      by Eric_Cartman_South_P ( 594330 ) on Friday February 11, 2005 @07:34PM (#11647939)
      Wang will be around forever. Enron does so much enery business, they will never fall. Worldcom has the numbers to survive. Compaq will never collapse under its own weight. Sega makes great games and a great 32 bit console, they will be around forever....

      Need more examples? Point is: ANYTHING can die.
    • Re:Uh huh (Score:3, Insightful)

      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 get
  • 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 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.

    • 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 sou
  • 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.

    • 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 tmk ( 712144 ) on Friday February 11, 2005 @07:29PM (#11647888)
    ...about the Roman Empire in the time of Julius Caesar. But it took several hundert years until it collapsed.
    • ...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.
    • in those days, how long did it take news to travel from one side of the empire to the other? how about today?

      in those days, how many people's loyalty was just a matter of thinking they were a good empire to invest in and could always pull out their entire investment within seconds? how many believed in the empire's principles, not just its bottom line? how about today?

      in those days, how much of life was based on the empire? how many deaths would be caused by the empire's collapse? how about today?
    • by rsborg ( 111459 ) on Friday February 11, 2005 @07:45PM (#11648057) Homepage
      ...about the Roman Empire in the time of Julius Caesar. But it took several hundert years until it collapsed.

      I wouldn't neccessarily compare Steve "MonkeyDance" Ballmer with Julius Ceaser. Maybe more like Nero or Caligula...

    • 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
    • by flyingsquid ( 813711 ) on Friday February 11, 2005 @08:33PM (#11648457)
      But it took several hundert years until it collapsed.

      Things move much more quickly these days, it seems to me. With technology changing so rapidly, unless you're actively growing and adapting, you're dying. It took a month for Firefox to hit 10 million downloads. Or look how fast products like the iPod or Google took off. Microsoft may not be fighting for its life right now, but a bit player can become a serious challenge very, very quickly. Likewise a new technology can completely change the game. Microsoft has done very well in adapting to new technologies in the past- they successfully met the internet head on after getting hit upside the head by not anticipating that one- the question is whether Bill Gates is still sharp enough and hungry enough to adapt that way again when a new challenge emerges.

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

    ...he has massively shorted MSFT.

  • by tool462 ( 677306 ) on Friday February 11, 2005 @07:30PM (#11647895)
    I won't believe it until Netcraft confirms it.
  • by Faust7 ( 314817 ) on Friday February 11, 2005 @07:30PM (#11647898) Homepage
    Yeah, and in late 2004 the Register posted that Microsoft was about to file for bankruptcy.

    (FYI, no B.S.: That article is printed, laminated, and behind a case in one of Microsoft's lobbies.)
  • 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.
  • root (Score:5, Funny)

    by Swedentom ( 670978 ) on Friday February 11, 2005 @07:30PM (#11647904) Homepage
    "The faint smell of root" :-D
    • Isn't root Australian slang for "have sex"?

      If the smell of root is "faint", you ain't doing it right.
  • by Quiet_Desperation ( 858215 ) on Friday February 11, 2005 @07:34PM (#11647937)
    I'm sorry. That was me.
  • Comparison? (Score:5, Interesting)

    by Saige ( 53303 ) <> on Friday February 11, 2005 @07:34PM (#11647948) Journal
    Five years ago it was a source of pride to go to work for the Evil Empire -- now, who cares? It's just Motorola with wetter winters.

    Umm... no. Definitely not.

    As I went from the latter to the former, I can tell you there's a lot of difference. Motorola is bogged down, lacking excitement in teams that should be excited. The place was being "SEI/CMM Level 5"'ed and "Six Sigma"'ed to death. The personality of the employees and teams was as interesting as the endless rows of slate gray cubicles. And it was horrid to take an internal class on Perl, and see experienced software developers that couldn't finish a simple basic program in 20 minutes that I had finished before the instructor was done explaining.

    At Microsoft, I'm excited about my job and the product I'm working on in ways I never was before. I'm more impressed by both the knowledge and passion of the people here than I ever was at Motorola. It's nothing like anything I saw in my 6 1/2 years at Motorola.

    I don't mean to sound like a MS cheerleader here, I just want to make it clear that this is definitely not a valid comparison to anyone who has spent any significant time inside the two companies.

    Oh, and the winter here is a hell of a lot better, even if it wetter. And the summers... wow.
    • Re:Comparison? (Score:5, Interesting)

      by Anonymous Coward on Friday February 11, 2005 @08:31PM (#11648439)
      Its funny how many MS employees visit Slashdot. It must be like reading an Iraqi blog during the war years.

      Apart from the side-taking, I find it very interesting how an iron curtain has developed between MS-crowd and OSS-crowd. Even in other companies there are MCSEs and MCSDs on one hand who insist .NET is the future, and the not-so-well-dressed OSS crowd. Working on cheaper hardware, trying always to run their latest game on gentoo.

      Its a war of Nerds vs Geeks. The Cathedral and the Bazaar. Regardless of all bias, both sides are fully functional, both producing products and distributing it to the world. 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.

      Different people enjoy working different places. I always enjoy work when I know I'll get paid for it. I also sometimes enjoy starting little OSS projects, my pet projects that I very excruciatingly design, plan, and start... just for the kicks and to see if I can make something better, but most of which die before beta. At work, we use both OSS and commercial OSes and software. Both philosophies are at war in every quarter, and despite what the slashdot (or microsoft) crowd might think, right now neither group has the overwhelming strength. Thats why so many companies HAVE to run a linux/BSD firewall, and a windows domain controller. Sure I can run a samba domain controller, but in some ways (beside security) its like running a Windows 2000 professional firewall.

      I wouldnt mind working at Redhat AND at Microsoft. Given the options, I'll choose whichever pays me more. I suspect I'll hate the work at MS, because I'm biased, have been since 96 when I tried slackware 3.0. Theres also a kind of an addictive nomadic freedom related to opensource programming, which occasionally makes up for the lack of $$$.

      I dont think Microsoft will disappear, just as I dont think the x86 architecture will disappear. There are far too many games for me that arent ported to Linux or MacOS. There are far too many applications that require win32 API to run, and running them in WINE makes em less stable not more. The whole reason why Microsoft is bigger than Apple, is why Microsoft will stick around... but Linux will certainly come of age. This competition is bound to intensify.

      I love Linux. It probably will not make one man extremely rich, but it will not only bring more freedom, yet complexity to desktops, it will also bring with it BSD and all other OSes which never had the chance before. Linux actually is a favor to Solaris and MacOS. Currently theyre competitors of sorts, but Linux will make portable applications the fashion. The huge source base that Linux and BSD have created will all run perfectly on both OSX and Solaris and the rest, giving them life (would you rather run Netscape 4.75 or Firefox 1.0 on AIX?), think of the free databases we now have.

      As much as we love to bash Microsoft and hope Linux will be the saviour, too many of us still log onto slashdot from our Windows machines, to bash Microsoft. We've only paid hard cash to Microsoft.
    • Re:Comparison? (Score:5, Informative)

      by SewersOfRivendell ( 646620 ) on Saturday February 12, 2005 @12:34AM (#11649637)
      You, sir, are quoting out of context. The full paragraph is this:

      Does anyone out there love MSN? I doubt it; it seems to share AOL's fate of being disliked but not hated enough to change your e-mail account. And do college kids still dream of going to work at MS? Five years ago it was a source of pride to go to work for the Evil Empire -- now, who cares? It's just Motorola with wetter winters.

      In other words, he's talking about how college kids perceive Microsoft, not about the current reality of working there or about contrasting it with Motorola.

  • 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.

  • by DuctTape ( 101304 ) on Friday February 11, 2005 @07:38PM (#11647977)
    I have the sure-fire way to make Microsoft fail: I'll invest in it. My history with investments is legend: Iomega, Syquest, Alcatel, to name some.

    As soon as the market opens on Monday, I'll buy a few hundred shares, and watch the tumble.

    Get out while you can.


    • by targo ( 409974 ) <> on Friday February 11, 2005 @08:51PM (#11648580) Homepage
      I have the sure-fire way to make Microsoft fail: I'll invest in it. My history with investments is legend: Iomega, Syquest, Alcatel, to name some.

      There was a joke in Communist Poland a while ago.
      An old jew has 1000 zlotys (Polish currency). A guy from the local savings bank advises that he should put it in the bank.
      - But what if the bank goes bankrupt? the jew asks
      - The savings in the bank are guaranteed buy the Polish state!
      - But what if the state goes bankrupt?
      - Then your savings would be guaranteed by the whole league of Socialist nations, led by Soviet Union!
      - But what if the Soviet Union goes bankrupt?
      - Well, would you really be sorry to sacrifice 1000 zlotys for that?
  • by litewoheat ( 179018 ) * on Friday February 11, 2005 @07:41PM (#11648012)
    Yeah, wasn't Apple dead too? Like what, three times now?
  • 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 eclectro ( 227083 ) on Friday February 11, 2005 @07:42PM (#11648032)
    Microsoft will just buy Glade, the company that makes plug-in air fresheners.

    Your computer will emit a little wisp of air freshener [] the mext time you smell a hint of rot.

    You will actually look forward to seeing Clippy...
  • 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.
  • A bit of the obvious (Score:5, Interesting)

    by TimmyDee ( 713324 ) on Friday February 11, 2005 @07:44PM (#11648045) Homepage Journal
    Certainly this was written to get a bit of attention, but in a way he's just foreshadowing what happens to most businesses, especially those that grow as large as Microsoft has. A brief look through history will confirm this.

    AT&T is a good example. Although they were "broken" by an anti-trust suit, they actually volunteered to spin off the Baby Bells as a concession. In their minds, networking and computers were the future. In a way, AT&T had it all going for them. They ditched the tedious Baby Bell system to jump headfirst into a sector that absolutely exploded. Tons of people thought AT&T was the unstoppable 800 lb. gorilla that once it entered the computing/networking segment, it would just dominate it. History, however, has proved us wrong and now AT&T is about to be consumed by one of its children in an odd sort of Darwinist/Oedipal freak of the market economy.

    Now, I'm not saying MS will tank tomorrow or even five years from now. What I am saying is that there's always something that destabilizes the status quo. It could be something that they don't see coming; it could even be something they see coming but can't properly react to. In any case, the inevitable will happen and MS will fall. Some day.
  • by Alakaboo ( 171129 ) on Friday February 11, 2005 @07:45PM (#11648062) Homepage
    If you sniff the air, you can just make out the first hints of sensationalistic journalism.
  • 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 otis wildflower ( 4889 ) on Friday February 11, 2005 @07:52PM (#11648149) Homepage
    ... here []..

    Basically discussing accounting shenanigans before the bubble burst, and I remember reading it at the time (though this comes from this weeks' article links)..

    "The late Frank Gaudette was Microsoft's first-ever Chief Financial Officer. He was also Microsoft's first head of Human Resources, first head of Facilities, first at running just about every department that had to do with operations but not product development, sales, or marketing....

    My question was based on the idea that nothing goes up forever and there must come a time when even Microsoft is no longer a good buy. How can we tell when that time has come? ... He explained that Microsoft carried on its books no value at all for its software. Assets like Microsoft Windows or Microsoft Office, which might be given some book value and depreciated over time were carried on the books as valueless. This contrasted at the time with IBM, which valued its software assets at billions of dollars.

    "Watch for any changes in our accounting," said Gaudette. "If I need to I can start, depreciating the software and maintain earnings growth for years on flat revenue. Watch for the accounting changes, wait for the next uptick in the stock price, and then sell.""

    Read the whole thing, very interesting stuff...
  • by duckpoopy ( 585203 ) on Friday February 11, 2005 @07:52PM (#11648151) Journal
    The smell of VICTORY.
  • 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.
  • LOL! (Score:3, Funny)

    by PincheGab ( 640283 ) * on Friday February 11, 2005 @07:56PM (#11648194)
    if you sniff the air, you can just make out the first hints of rot

    LOL! This guy should smell RMS' sweaty armpits at his highness' next presentation and do a prognosis for OSS based on that!

  • by G4from128k ( 686170 ) on Friday February 11, 2005 @07:59PM (#11648218)
    As much as I, personally, do not like them or their products, I doubt that Microsoft is going away anytime soon or anytime at all. Too many people have invested too much money and time in the MSFT platform. Moreover, MSFT's biggest weakness (security) is not unique to them.

    Regardless of the bad architecture decisions unique to Window's, all platforms are vulnerable. This existence of any security weakness in other platforms (even if quantitatively smaller) is used as rationale for staying with "the devil you know."

    But the real core of the problem is deeper than any one exploit or architecture mistake. The core problem with security is that the "bad" guys are, in many ways, more motivated than the "good" guys. On the one hand you have the black-hat hacker/spammer/spyware creator/ crime syndicate that is sure that they can make a potload of money off any little crack in a computer's security. Thus, they are highly motivated to search for any flaw and exploit that flaw in however many millions of machines they can reach. On the other hand you have millions of users that don't think that they will have a security problem and thousands of programmers who think their code (or at least their job) is secure. Thus neither the programmers nor the users are as motivated to create security and the bad guys are motivated to defeat security. Thus, the global resources devoted to cracking computers exceeds the local resources to securing computers. Thus all computers have holes and MSFT is unlikely to die because Windows is somehow uniquely insecure.

    At worst/best I see Windows slipping to 50%? marketshare before MSFT throws more programmer-hours at security than the entire OSS community could ever hope to muster. With enough of the proverbial monkeys at keyboards, MSFT will regain the security crown or at least through enough marketing dollars to claim it. Morevoer, as Windows loses marketshare, the black hats will attack other platforms. People will soon realize that the new non-Microsoft software is really not that much better than the old stuff and go back to MSFT. At best (for Microsoft's foes), the world will reach some equilibrium point of Windows, Linux, Macintosh, and other platforms.
  • This story reminds me a bit of the conditions right before the collapse of communism. Democratic Senators and the editorial board of The New York Times all said that the Soviet Union was a permenant fixture on the world stage, that co-existence rather than opposition was the only way to deal with it, and that Ronald Reagan was a fool for building up our military and seeking to fight it.

    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.

    So it is with Microsoft. Besides Windows and Office, what products do they have that are profitable? Story after story comes out about how Microsoft is going to take over this or that sector of the industry (MSN, WinCE, WMP), but they never seem to turn a profit. Like the Soviet Union, they've overexpanded, they have a restive population tired of chaffing under their iron bootheel, and a few pushes (Linux, iTunes, etc.) may be enough to push them over the edge.

    To put it another way: It's no accident that both the Soviet Union and Microsoft are called "the Evil Empire."p.

    • 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 astrashe ( 7452 ) on Friday February 11, 2005 @08:02PM (#11648244) Journal
    I think that this guy is right, up to a point.

    We see lots of things that tend to loosen up MS's chokehold on the industry.

    Large government clients are pushing for open office document formats. People are using more and more software that runs on multpiple platforms (ie., Firefox). New platforms, like phones, set top boxes, media centers, PDAs, and the like aren't panning out.

    And many customers really want out. People complain about MS a lot now.

    To me, the most significant thing is that they don't seem to be making the right moves. They're not doing anything interesting, and they're not responding to their technical challenges in a vigorous and competent way.

    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.

    But on the other hand, think about how much money they have. That means that there's no chance of them collapsing or going away. The cash gives them enormous staying power.

    I don't think that collapse is a likely scenario. It's more likely that they'll be more like an IT industry Sears.

    Sears was mismanaged for decades. Long after the retail industry had passed them by, they were still doing things in the same old dumb ways they had always done it. But they were still there, because they had gotten to be so big and strong in the days when they were on top. They owned a ton of land underneath their stores, and it was worth a lot of money. They had staying power.

    I feel really good about the future. I don't think anyone's going to have their boot on our necks the way MS has in the past. Apple is making some beautiful machines, and Linux is a couple of years away, at tops, from being really competitive on the desktop. Windows will probably get cleaned up, and it will probably end up being cheaper.

  • 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 erroneus ( 253617 ) on Friday February 11, 2005 @08:13PM (#11648316) Homepage
    After all, he's essentially correct in that the world's imagination is on Linux and Firefox rather than Windows and Explorer... at least in what I've seen in my limited scope.

    But if I were to interpret what I smell, I'd say it was something along the lines of huge change rather than oncoming death. Microsoft [should] know they aren't moving the way they once did. Their code is too big to maintain backward and forward compatibility and things are breaking around the edges. I can't tell you how many places I've read that Microsoft needs to make a new product from scratch and throw out compatibility if it wants to recapture the hearts and minds of users and administrators. I think we're all very ready for something new which is why we're looking to Linux... well some of us are looking to Apple as well as the author points out.

    Microsoft is a lot of things in my book but stupid isn't one of them. Their hearts are in the wrong place though. They need to shift focus away from themselves and back onto the consumer.
  • 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. lone.html/ []

    Microsoft may have a few years left too.
  • I'm a Un*x freak (Score:5, Interesting)

    by krray ( 605395 ) on Friday February 11, 2005 @08:17PM (#11648334)
    I come from a age where you had a choice of MS-DOS or ... Unix. AT&T SysV is where I learned myself -- the goal, of course, was always to get root. I got root.

    If you look at all the major players in the market place today you'll note that they're _all_ getting behind one of the Un*x's or the other (I consider Linux, BSD, and OS X all to be "Unix" regardless of what SCO [or you] may think :). There's a LOT of logic behind how Unix systems work -- and considering the concept/usage is much older than Microsoft I see it as being rather well thought out and mature. It becomes so obvious when dealing with trying to fix something on XP.

    Microsoft may be a 800 pound gorilla, but IBM is still a 8,000 pound monster that is going Linux [and still pissed off]. After recently comparing OS/2 to XP side by side I understand. :)

    Of course there's a reason (in our organizations) that as of 2000 it was decided to REMOVE Windows from the mix and migrate all users to either Linux or OS X. I myself [IT admin] use OS X at home for a reason. Others will follow.

    It's simple really -- in personal consulting I charge $35/hr for IT work if it's Linux/BSD/OS.X/QNX/Netware based. The rate changes to $70/hr for de-virus'ing your system [again]. Clients quickly learn what the Mac-mini is all about...

    Yeah, Microsoft is dying -- and unfortunately (for the US) it'll be a slow death. IMHO the US had better wake up or we'll technologically have out shorts eaten by the rest of the world as they continue their migration away from Windows.
  • 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!
  • 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 Sleeper ( 7713 ) on Friday February 11, 2005 @09:37PM (#11648884)
    Q: Is it true that capitalism is rotting away?
    A: Yes. But what an aroma!!!
  • by mr. marbles ( 19251 ) on Friday February 11, 2005 @09:56PM (#11648980)
    But it's not Microsoft. It smells more like the rotting of a tired journalist raising controversy to drive readership. How pathetic. *LOOK AT ME!*
  • by Aeron65432 ( 805385 ) <agiamba AT gmail DOT 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 codepunk ( 167897 ) on Saturday February 12, 2005 @12:34AM (#11649635)
      Ah but their burn rate is over 6 billion a year. And the actual amount is 35 billion this means less than 5 years to be reduced to ashes. You have to remember their stock value will crash way before that, employees start leaving for high ground. Then marketing hurts from cut backs, development hurts they go into bug fix mode only and then the inevitable death occurs.
  • 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.
  • The smell of Bad (Score:5, Interesting)

    by NullProg ( 70833 ) on Saturday February 12, 2005 @12:29AM (#11649619) Homepage Journal
    Microsoft didn't learn the lesson of the late 80's/90's when IBM tried to push us to more proprietary/expensive systems. IBM stock tanked from a high of $84 to $48. My Boss at the time said 'screw em', so did many others, we shifted to Microsoft.

    Fifteen years later, Microsoft makes the same mistake. More expensive, not compatible etc.
    I've already done twelve new Linux installs this year, happy people too.

  • 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 soft_guy ( 534437 ) on Saturday February 12, 2005 @03:54AM (#11650288)
    Microsoft makes money on Windows, Office, and Exchange. Most of the other stuff they do is a money loser: MSN, X-Box, Hot Mail, Windows CE, hardware. The other stuff may be strategic and it may help to prop up Windows, but still its mostly a money sink.

    If Microsoft were to lose Windows and Office monopoly because of competition, Microsoft would not be a profitable company - not by any stretch. What could cause them to lose Windows and Office. Open source.

    All that really has to happen is for Linux to get more usable. And a lot of that has to do with drivers. Once that happens, the big PC vendors will migrate the Linux faster than you can say "Linux Torvalds". The layoffs from Microsoft will be similar in relative magnitude to the layoffs at IBM in the late 80s. I say relative because MS has far fewer employees than IBM did.

    Let me say that I would not want to own a house in or around Redmond when this happens. I also would not want to have a lot of MS stock when it happens either.

    Within 5 years Linux will become the dominant desktop OS. MacOS X will have a marketshare perhaps double what it is today. Windows will have a smaller marketshare, but will still be around as Microsoft focuses on it as a "core business" for those who can't or won't migrate to Linux.
  • by Eminence ( 225397 ) <> on Saturday February 12, 2005 @05:37AM (#11650551) Homepage
    I'm a bit cautious with predictions of Microsoft's failure, collapse or whatever in the near future because I've been burned in the past. Back in '96-'97 when Linux was developing at blazing speeds and what Microsoft had was crappy Windows '95 it also looked like they run out of steam. We laughed at Win95 as being a 16-bit overlay for DOS 7.0 (which it basically was) and NT 3.51, well, wasn't exciting at all (though it worked). They almost missed the whole Internet thing, Internet explorer was pathetic in comparison to Netscape. Everyone I knew was sure open source would wipe out likes of Microsoft within a few years.

    But none of this happened. Netscape was wiped out, IE dominance is settled even despite IE again looking pathetic in comparison to Mozilla's newest breed. Office still rules and there is nothing to beat it. Open Office []? Well, for simple documents and spreadsheets maybe yes. And yes, it has improved a lot over last few years. But still for serious word processing, I'm sorry, but no.

    Also Linux is still a great server OS but still can't be considered seriously for the desktop for non-geeks. I've installed Ubuntu [] three days ago. I was really amazed how little has changed since three years ago when I, sadly, abandoned Linux as my desktop. Again, a few things that can't be done in any other way but by editing config files with, say, vi. I enjoy vi and I still remember what to edit, but does a simple user? And no access to most of applications without reading manuals and adding additional repositories of .deb packages (mostly for ideological reasons). It is not "install and work", it's still "install and then tweak the things around to get anywhere". This is the part of the mix that makes OS X [] a success - some OS X users I know were not even aware there was a command line on their system until I showed them. Now, that's how a modern GUI OS should be designed. If there is a Linux distro to match this please let me know, but I think I'll end up buying a PB [] when I'll save enough money to do it.

    And in the meantime Microsoft has improved a lot. XP is stable, easy to use and I'm yet to have a virus infection or anything after three years of having it on my PC (which is connected to the net 24/7 on a public address, BTW). Also Office has improved a lot in terms of stability and reliability. I remember using Office 97 which without SR-1 crashed a lot and we had lots of problems with it. Office 2003 I use now is rock stable. This is not exciting, this is nothing new but maybe in these days of computing becoming commonplace (and programming & sysadmining becoming a blue-collar commodity job) what is needed is not excitement but solid, predictable functioning? Can you think of a killer feature now missing from, say, Word that would excite the masses?

    So, maybe Microsoft is just maturing with the market. They were a geeky sweatshop when computing was the new, exciting field. They are a solid, respectable, middle-aged corporation now. So, I don't think we will see them sinking anytime soon.

Nondeterminism means never having to say you are wrong.