Paul Graham has just declared that Microsoft is Dead, and would you believe it — there was a lot of reaction and I gather some misunderstanding… leading to Graham’s subsequent issuance of Microsoft is Dead: The Cliffs Notes.

In the first piece, he writes,

A few days ago I suddenly realized Microsoft was dead. I was talking to a young startup founder about how Google was different from Yahoo. I said that Yahoo had been warped from the start by their fear of Microsoft. That was why they’d positioned themselves as a “media company” instead of a technology company. Then I looked at his face and realized he didn’t understand. It was as if I’d told him how much girls liked Barry Manilow in the mid 80s. Barry who?

Microsoft? He didn’t say anything, but I could tell he didn’t quite believe anyone would be frightened of them.

Microsoft cast a shadow over the software world for almost 20 years starting in the late 80s. I can remember when it was IBM before them. I mostly ignored this shadow. I never used Microsoft software, so it only affected me indirectly—or example, in the spam I got from botnets. And because I wasn’t paying attention, I didn’t notice when the shadow disappeared.

But it’s gone now. I can sense that. No one is even afraid of Microsoft anymore. They still make a lot of money—so does IBM, for that matter. But they’re not dangerous.

And to clarify, he writes,

What I meant was not that Microsoft is suddenly going to stop making money, but that people at the leading edge of the software business no longer have to think about them.

There are plenty of companies in that category that make decent profits. SAP for example. They make a lot of money. But does anyone developing new technology have to worry about them? I doubt it. When I said that Microsoft was dead, I meant they had, like IBM before them, passed across into this underworld.

Ceasing to matter doesn’t mean a company is going to go out of business next year, any more than it means a pop star will suddenly become poor. But it probably means there is trouble ahead. Actors and musicians occasionally make comebacks, but technology companies almost never do. Technology companies are projectiles. And because of that you can call them dead long before any problems show up on the balance sheet. Relevance may lead revenues by five or even ten years.

People have given me various disreputable motives for saying that Microsoft was dead: that it was linkbait, or even that by publicly ridiculing them I hoped to turn them into a “customer” for YC-funded startups. (I’m not that bad at sales.) My actual disreputable motive was that I wanted to be the first to call it. But that does at least entail some risk. If you’re the first to call something, you’d better be right. If the monster turns out not to be dead after all—if they can somehow morph themselves into something startups have to worry about again—I’ll look like a fool. But I’m willing to take that risk.

Paul Graham is probably the first to levy this exact charge against Microsoft. Since it comes around the same time as Microsoft loses out to Google on the DoubleClick acquisition. Maybe $3.1 Billion was just too rich for Microsoft, but the fact that Google’s offer was cash had to be a factor. I remember Bill Parish criticizing Microsoft with the argument that the entire company was a financial house of cards… too bad his critique hasn’t been updated since 1999. Time was, Microsoft was under antitrust scrutiny, so many have already observed the irony in their call to block the Google/DoubleClick deal. In fact, I don’t think the irony is lost on anyone but Microsoft. Graham is probably correct, too… Microsoft is no longer the company people are getting nervous about. No, now it’s Google. Maybe Jimmy Wales will take them down a peg with Wikia, but I think the general consensus is that it’s a pretty tall order, so don’t expect it to happen all that quickly.

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