Microsoft is Dead

I wouldn't count them out just yet. It's true that they can't kill a web 2.0 businesses like youtube the way they could kill desktop-based competitors in the past, but don't forget that the browser itself is a desktop-based app.

If I controlled MS, I would try to develop a better platform for web apps than Firefox (which is definitely possible). I'd use patent-encumbered APIs, which I would share while trying to build market share, and then force my competitors to stop using once they were entrenched. Maybe somebody smarter than me could come up with a better idea, but the point is that it's probably still possible for them to leverage their OS near-monopoly into a web near-monopoly.

It would have been far easier for them if they had started earlier. Firefox would have been easy to kill 3 or 4 years ago. But MSFT has so much money and such a large installed base that they can get away with a lot of screw ups before they really cease to be a threat.

I agree that, for the time being, entrepreneurs don't really have to worry about MS. But they're not really dead. They're just comatose.

Photoshop itself will soon have an online version: http://news.com.com/2100-7345_3-6163015.html

That's exactly what made the Graham essays (pre-YC) so compelling: this wasn't someone with a vested interest, just an astute observer making comments few others were.

Blurring that line is a mistake.

I somewhat agree with you.

However, it is obvious that hardware vendors still fear Microsoft. The day that they stop fearing Microsoft is the day that just about every PC will have the option of either Windows or Linux.

Last time a company tried something like this was IBM in the mid-90's and Microsoft made quite an example of them by increasing their annual Windows licensing charge by $200 million.

It's intersting that you highlight GMAIL as the point where Google became scary. If anthing, GMAIL is another example of how Google's efforts outside of Search have largely failed...at least by the standard they set with Search. I used tried to find the latest marketshare numbers using Google but could't find anything current :) but as of the middle of last year they had about 2% of the Web mail market. Hmmm... Huge success?

I think their only real succcess outside of Search is mapping but even there they're trailing Microsoft (local.live.com) in innovation. Check out the 45 degree angle photos on local.live.com if you don't believe me.