Today John Dvorak wrote a pretty good article on why Microsoft’s stock is, in his words, dead money. Yeah, I know it’s on Murdoch’s news service, but Dvorak’s old school and knows his stuff.
It is so odd how things cycle. When I was hustling machines about five miles from the Redmond campus, I hated the IBM reps. Every one of them. They were not merely arrogant (though nothing like the Apple reps, the very snottiest of all), they were stupid (which the Apple reps were not). We were making 5% margin on IBM machines. We made 20% on others. Also, no one wanted IBM. Why should we sell it? Well, because it’s IBM. In reality, we were selling them at cost to keep our dealership. We couldn’t get to a profitable discount level with IBM unless we sold more. However, when we had a line on a big account and were willing to go out at cost just to advance our business with IBM, IBM would go direct and undercut us (and we were to understand and accept this, that ‘business was business’).
Their attitude was that everyone should want IBM and we should push everyone to IBM, even when a retarded goblin could see that IBM was the very worst deal going. Even when they came out with a good product, people didn’t want IBM’s MCA (‘MicroChannel’) architecture. They had a great portable and I had a client interested in two. He asked about the architecture, and I said ‘MCA’. His words, quoted exactly as I recall: “Not that f***ing MicroChannel.”
Microsoft, by contrast, was swift and slick and witty and inventive. It was eating Lotus’s lunch, WordPerfect’s lunch and just about everyone else’s. It was the smartest kids in the room. Some of its stuff was dumb (remember ‘Bob’?) but a lot of it took hold. Even IBM used Microsoft’s DOS (which M$ didn’t actually invent, but bought in desperation early on). And when IBM tried to make everyone buy OS/2, the market said ‘meh.’ You could tell the Microserfs when they came into the store. They looked like hippies gone full geek, total slobs. You didn’t make judgments. They were often FYIFV (‘f*** you, I’m fully vested’) tycoons and they might well write you a check for two brand new laser printers.
Now M$ is the dinosaur rather than the juggernaut. It invents nothing. It follows and tries to appropriate the market, and the market increasingly sneers. In the process of its rise, its ruthlessness made it many, many enemies who yearned for the day M$ would become irrelevant. I was one, as I labored on supporting M$ products in the workplace as an IT jock, basically forced to deal with them as the world was once forced to deal with IBM whether it liked IBM or not.
Dvorak’s right. MSFT is a lousy buy, even though its price has been flat for years while the market has risen. They’re not going to invent anything. If they weren’t sitting on so much cash, and if they didn’t have so much inertia due to the past with regard to installed base, they’d collapse. They are in much the same situation as IBM once was. They can say what they want, but people no longer care.