How Microsoft caused the DotCom Bubble and why their Skype ‘Hail Mary’ is irrelevant

“Since the mid-nineties, I have nurtured a thesis about the dotcom bubble, tech bust, and the role Microsoft played in it. The opportunity to discuss it has never came up,” Barry Ritholtz blogs for The Big Picture. “That is, until Microsoft’s purchase of Skype yesterday.”

“I have long argued that while Microsoft might have begun life as a software firm, it long ago morphed into something that was more a very clever IP/marketing firm with a huge tactical legal advantage that gave rise to a monopoly, rather than a true technology company,” Ritholtz writes.

“Microsoft remains hugely profitable today, but increasingly irrelevant. Their purchase of Skype is an attempt to buy back some relevance,” Ritholtz writes. “They are the rich, uncool fat kid at school, trying desperately to buy their way into some popularity.” On a spectrum of relevance, where would you place MSFT: Are they closer to Google or Apple or Facebook or Twitter, or are they more comparable to the Maytag repairman of the tech world?”

Ritholtz writes, “Let’s back up a bit, and look at Microsoft’s history, including the impact they had on other technology in the 1990s.”

Read more in the full article – recommended – here.

[Thanks to MacDailyNews Reader “Trevor” for the heads up.]

Related articles:
8.5 billion reasons to fire Microsoft CEO Steve Ballmer – May 11, 2011
Microsoft’s Ballmer reportedly tricked into overbidding for Skype by $4.5 billion – May 10, 2011
Skype releases patch for zero-day vulnerability in Skype 5 for Mac – May 10, 2011
Microsoft + Skype = $8.5 billion thrown into a bonfire – May 10, 2011
Microsoft buys Skype for $8.5 billion; company’s largest-ever acquisition – May 10, 2011

24 Comments

    1. I think you may be confused. At first casual read thru, I read it that way also. He is saying that MS was responsible (indirectly) for the dotcom bubble… not the dotcom bust.

      1. Not that it matters much but he didn’t write that either.

        I’m sure he meant that, since the nineties, he’d been thinking about, for example, the “dotcom bubble” (which segued into) the “tech bust”, and the role (if any) that Microsoft played in it.

        In other words, he included the bubble AND the bust in his thoughts. And he didn’t say that MS was “responsible” for either.

        I only mention it because a phenomenon that long ago caught my attention is the sin, which seems to me far more frequent on the internet, of reading A but understanding B. It’s at its most common in the usenet newsgroups, where posters frequently excoriate some poor, hapless bastard, for something he DIDN’T say.

        Endless argument follows but those who misunderstood steadfastly refuse to acknowledge their error and apologise.

        1. @grhaki: Thanks for bursting some peoples’ bubbles! Seriously, you have nailed it spot on WRT how we hear A but understand B; it happened all the time in project meetings I sat in ages ago. It was so difficult for a marketer, for instance, to not understand it when an engineer said “no way.”

          I enjoyed reading your comment.

  1. REad the article and liked it. Read the comments. Some of them got it…. some sounded like MS paid trolls… sad for them. 🙁

    I always say, “Use what you like”. and if you like MS, fine use it. But I am getting the strong impression that people like MS cause they are used to it. Period. (or they are paid 🙂 )

    Apple is not perfect… but they are more focused on doing what is right for the customer. I see it every day in different ways. (bought a refurb nano…. a month later the ear buds started cutting out. Showed the genius bar guy. I thought they might replace the ear buds. They gave me a NEW nano. No sweat, no cost. Just keeping a customer VERY happy.

    Microsloth’s take,,,,, “how do we monitize this?”

    Just a thought,
    en

    1. He’s right. He said PC, which we all know is vernacular for an IBM-compatible computer. A personal computer is just that, generically speaking, but a PC is a Windows computer.

      We all know Apple was the first company to deliver the first commercially viable computer which, when coupled with Visicalc, proved to be the most popular business machine as well.

      1. well, if a PC is a Windows computer, then IBM giving the world the first PC in 1980 was pretty amazing, considering they didn’t even have MS-DOS at that point.

  2. From the article re VC funding… “What is there to stop Microsoft from putting out their own version of this idea, integrating it into DOS or Windows, or giving it away for free?”

    Edited… “What is there to stop Google from putting out their own version of this idea, integrating it into it’s “Google World”, or giving it away for free?”

    Announcements and moves made at the Google I/O conference backs up this statement.

    The reason Google has become the new Microsoft.

    “Doing no evil”… sure.

  3. When users/consumers buy into FREE, with no thought, they are at best naive, and at worst going to suffer ads, emails & identity theft they did not expect in one form or another.

    Anyone who takes HotMail or GMail should understand what “FREE” means. Free = we suck you in and “monetize” you by selling info about you. If you don’t care, OK.

  4. The blogger has an interesting take that I’ve not thought of before, but it does explain MS’s seemingly irrational moves at times.

    However, I do not think it caused or even led to the dotbomb bubble. Look to our central bank for that.

    1. What you don’t understand is, how the bubble caused a major set back for the tech world, and how their recent purchase has the potential to cause another collapse in the market.

      Microsoft will spend billions more, marketing Skype and getting their stockholders hopes up. The Street will succumb, as will others who choose to invest in after-market products and exclusives with Microsoft.

      Microsoft will invest enormous resources to meld Skype into Windows and Office products in a vain attempt to assume a commanding position in the telcom market.

      But, it will all blow up in their faces when Microsoft fails to deliver on the merits of the marketing campaign, which will prove to be all hyperbole and no substance.

      The delusion will deflate everyone’s elevated expectations and Microsoft and its

      Microsoft did more to stymie innovation and creativity throughout the last two decades and stalled

      1. The delusion will deflate everyone’s expectations and Microsoft and its investors, partners, and shareholders will have lost millions.

        That’s how the bubble works to destroy a market; overselling the sizzle for what ultimately turns out to be hamburger.

    2. Totally agree: The DobBomb had little to do with Microsloth. It was clueless investors chasing instant cash from trashy technology they could barely comprehend. It was somewhere to throw money that sounded super keen and futuristic.

      And after the DotCom bottom fell out, what was the last ditch place to invest? Real estate. And that bottom fell out…

      Meanwhile, through it all, there have been serious places to invest. You just have to do your research. That thing they called ‘homework’ in school.

      1. What you also fail to grasp is, Microsoft stymied innovation and creativity with the threat of undermining anyone who dared challenge their position, causing those with real money and creativity to withdraw.

        What ensued was an enormous marketing campaign to deceive, conducted by ruthless pretenders who had no intention of actually competing with Microsoft. They sold millions of product and quickly left the market, leaving millions stranded with polished turds.

        Look at the gaming industry with it’s thousands of titles that lack substance. Each title ships in a box that is covered in marvelous artwork and all the latest buzzwords and catch phrases, but the game itself is just a poor copy of another turd.

        Microsoft was instrumental in the causing the tech bubble as far as I’m concerned. They spent ten years destroying anyone who had a better idea, bought out anyone who did it better, and copied from the rest who resided in oblivion.

        Here we are in 2011 and Microsoft can no longer steal their way forward without appearing obvious, no more than a homeless man could steal a Cadillac and take it home.

        Microsoft is finished, unless they start building computers. Which is what Ballmer’s replacement has in mind.

        1. Agree wholeheartedly! And now that Microsoft knows it can’t blatantly steal anymore it has opened the doors to other unscrupulous companies with too much money and “evil” in their mission statements to take up the slack as most untrustworthy tech company…

        2. @G4Dualie: “Here we are in 2011 and Microsoft can no longer steal their way forward without appearing obvious, no more than a homeless man could steal a Cadillac and take it home.”

          Thanks for the laugh – the image of a “homeless man” taking a Caddy “home” was priceless!

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