Apple has the technology headroom to keep making more powerful iphones for several more generations... but will it reach a point where people don't need a more powerful phone? (that they don't get any benefit from it, so that power is not utilized). I would have thought they were more powerful than a phone needs to be already, but obviously not! One view is that they are still replacing desktops, suggesting users will value increases in power until they are as powerful as a desktop. Of course, gaming use is unlimited, but I'm not sure that's a key usage.
I would expect something like the Apple watch is essential for Apple, because that small form factor has lots of runway, as each increase in power would be a benefit to users.
Why wouldn't gaming be a key usage? On iPhone alone it is a multi-billion dollar industry. I think gaming could be one of the big driving forces moving forward once they get serious about Apple TV. Give it a few years for the processing to catch up to today's consoles and you no longer need an Xbox/Playstation.
And yet, people buy SSDs even though they could get more memory in a HDD. Because they value speed over capacity.
"The Innovator's Dilemma" traces back the disk drive industry, and in each generation, people choose smaller memory capacity, for the sake of a smaller package (there used to be 8 inch drives, for example). The theoretical idea is that once users' need for performance is satisfied (it's "good enough"), they turn their attention to other issues - such as price, convenience/ease-of-use, customization etc.
It has happened with desktops: that's what caused the brief "netbook" popularity, and what made smartphones successful. Desktops had overshot what was needed for many tasks (browsing, email); but the smaller devices were just becoming powerful enough to manage. So although desktops were more powerful, that extra power didn't matter to many users.
The underlying idea is twofold: (1) all technologies improve over time, as engineers find better ways to do things (Moore's law is just one example); (2) what users demand also increases over time, but at a slower rate
Therefore, if you start with new approach that really struggles with many tasks, eventually it will become powerful enough for what users need; during the same period, the old technology started off powerful enough, and became even more powerful - but users didn't care, because it was more than they needed (or, at least, they didn't want it as much as they wanted other qualities, like convenience etc).
They are finding it easier to sell skinny phones and long battery life than CPU speed. Phones could be quite a bit more powerful if they were as thick and heavy as they used to be.
The Google Project Tango prototype phone is chunky but has lots of CPU.
Also adwords (the product that is actually sold). Brilliant idea: users only see ads relevant to their interests; advertisers get qualified users, and instant feedback and adjustment; google gets the highest price possible (by advertisers bidding against each other).
Google is double the good guy: (1) helps users for free, because advertisers pay for it (like free-to-air TV); (2) advertisers can't complain about google's high prices, because it's the other guy who bid it up (like selling munitions in an arms race).
I believe google came up with this independently BUT goto/overture did it first, patented it, sued, and google settled.
So far as revenue is concerned, this is Google's only product.
> I already know what the reaction to this essay will be. Half the readers will say that Microsoft is still an enormously profitable company, and that I should be more careful about drawing conclusions based on what a few people think in our insular little "Web 2.0" bubble. The other half, the younger half, will complain that this is old news.
Look at the arguments PG makes for MSFT being dead: because he doesn't invite them to demo days (seriously, afaict that's 100% of the evidence he presents). Look at the arguments you make (it will be hard to reverse death, it will be hard to sustain constant revenue). The premise of both is ridiculous, because again, there is nothing to reverse, and their revenues are not constant.
Are any of these arguments actually supported by the data?
Sort of: MSFT had a hard time around the year 2000 due to the bubble, as you pointed out. But their growth since then has been pretty respectable, especially in the last 5-10 years, and if you compare their growth rates with GOOGs they really aren't far off despite MSFT being a much bigger company during that time.
Overall I feel like you are asking the question "How will MSFT ever recover" and I reject the premise of that question. Recover from what? What evidence do you give that MSFT is not doing well right now?
PG wrote that essay 7 years ago. Take a look at MSFTs numbers for the last 7 years. FWIW I suspect I am the younger half as I was only 18 when he wrote that essay and I don't think it's 'old news' or news at all because it's simply not true. And that PG anticipated this counter-argument doesn't make it incorrect.
"Dead" is misleading hyperbole - pg emphasises that MS is "highly profitable". His data point is that MS, in his and startups' experience, is no longer a threat. It's just another big company.
I was wrong to say "constant" revenues. But I think my main point, the contrast between a rapid growth period and a steady mature phase, is accurate. The MAX graph shows it, but it's hard to appreciate the exponential growth on the left, because it's so small - expanding the scale would help show it. But MS was seen as astonishingly successful leading up to 1986 - data isn't even displayed for that far back. MS was founded in 1976, DOS released in 1981, which was an instant best seller, on the coattails of IBM's PC, which opened floodgates to the pent-up demand for desktop computers, with the reassurance of "I.B.M.".
So maybe "past its prime" isn't accurate either, but "past its period of incredible meteoric rise". Depends on the definition of "prime".
---
Above is the quantitative data you're asking about. But there is qualitative data, too, which is the basis of predicting what will happen next. By looking at the basis of MS's business success, and knowing how businesses tend to evolve from studying other business, we can try to predict what will happen next. MS's success was based on IBMs -> DOS -> Windows -> Office, leveraging each to the next. With IBMs, DOS and Windows no longer dominant, they are left with Office fileformats and skill at serving business customers. These are strong skills, but the aren't the terrifying killer competitive advantages MS used to have.
So, maybe it's mostly the dramatic constrast with what MS used to be.
If you didn't see what MS was before, the contrast wouldn't strike you.
I see that MS are having success with cloud-based enterprise stuff. This makes sense, if it's the same software; they are good at serving enterprise customers, who would prefer not to have to switch. It may also represent going up-market - which is typical for incumbents whose low-end is under threat. It often leads to better and better profits until the low-end is eventually good enough and takes over. (Christiansen's The Innovator's Dilemma). Resources and technical talent and business skill aren't enough to save a company when the grounds of their advantage erodes.
I think the basis of pg's idea is especially for web-based companies. You may have heard of startups getting killed by google moving into their space (or, buying them). It's especially dangerous for people making add-ons for twitter, facebook etc. Now, MS used to do with with Windows: you'd make a product, it was good, MS would roll out that feature in Windows itself... you are dead. But that doesn't happen for the web, because it isn't MS's platform. And so people aren't scared of MS - that's pg's point, I think.
I'm guessing that if the balloon was often scraping ground, and they let gas out, it would be even worse. But the article could have clarified this, and at least spent a little more time on this pivotal moment of the narrative.
Yes, Balloons control their height by dropping ballast and/or releasing gas. When they eventually run out of ballast, they can no longer control the balloon.
Astrology is obviously nonsense, but it seems plausible that the season of birth could have a personality effect: the cold dead of winter, with little fresh food vs spring etc, also from the attitudes of surrounding adults.
Of course, different near the equator, and phase-shifted in the southern hemisphere, and... much less pronounced in modern times, with supermarkets, refrigeration, air-conditioning/heating, imported foods, and wider social presence (newspapers, TV, radio, internet, phone) etc.
There are actual studies. Lots of professional athletes were in the older part of their cohort when they were younger. So the effect Terr_ described seems to outweigh the one you describe.
"which has been huge" is the key. Businesses typically grow, mature then decline. Microsoft's revenues had stopped growing. The very basis (PC) of their core franchines (Windows and Office) is in decline. It looks like a business that is past its prime.
Can Microsoft reverse this? It's hard for them, because they are so successful. Most other successes look small: e.g. their incredible and profitable xbox business isn't in the same league. To rejuvenate themselves would be like Google coming up with a better business than adwords, or xerox a better business than copiers. It's like Apple TV: a wild success for anyone else, but for a long time, a "hobby" for Apple.
BTW: Apple's rejuvenation, and creating several new categories, is incredibly unusual.
Can Microsoft maintain constant revenues? Windows still has a huge amount of software for it, and businesses rely on it. They also rely on Office. Phones and tablets have not really began to displace these business roles. Microsoft has made Office for them anyway; and it also has Windows for tablet (on Intel). These won't displace current phones/tablets - but they will enable businesses to keep using their software and Office.
Of course, there is an opportunity for new ways to serve businesses, using mobile devices, that will make the old Windows software obsolete. This is how Windows could die. Office might be harder to kill.
This is completely false. Microsoft's revenue has grown every year for the last 10 years except for one. I'm not really sure how to respond to the rest of your comment based on that fact.
To clarify, I meant stopped growing at its previous rate. I can't find any data further than 10 years old ATM (which is within its mature growth period), but have a look at its stock price. Note the exponential increase before 2000. https://www.google.com/finance/getchart?q=MSFT&x=NASD&p=40Y&... While there was a stockmarket boom and crash then, you can see that MS had been growing madly for a couple of decades previously.
Why the downvotes? If you look at the stock price over the MAX range, you can see exponential growth until 2000 - then it went sideways. Stock price represents the opinion of investors. It's not just programmers.
I would expect something like the Apple watch is essential for Apple, because that small form factor has lots of runway, as each increase in power would be a benefit to users.