Forbes examines the state of Microsoft's business:

Microsoft is slowing down. It is bigger, more lumbering and less profitable than it was five years ago. Its sales are up 73% in five years, but profits are up only 30%. Payroll has doubled in the last six years. In the fiscal year just ended, sales rose only 8%, the first time the company has ever reported less than double-digit growth.

In the dog years of Silicon Valley, Microsoft, at 30, is in advanced middle age. The company relies on Windows and a suite of desktop applications--products released a decade ago--for 80% of sales and 140% of profits
One specific observation I found fascinating:
"Projects were weighed down by integration," says Alexander Hopmann, who quit Microsoft in March to join a home-networking startup, Pure Networks, in Seattle. In 2000 he worked on new storage software for Exchange, a server program that works with Microsoft Outlook e-mail, but the Outlook team, without admitting so, didn't want it. "They sent me a 200-page document that said our technology had to be 100% better than the current stuff. Then it failed, of course, so they did it themselves."
I am guessing here, but perhaps Hopmann is describing the Local Web Storage System, which was announced at MS's MEC 2000 and then cancelled eight weeks later.  The concept resurfaced in Outlook 2003 as "cached mode", and I always wondered what was different about the original vs. shipping implementation.  Perhaps now we know.

Link; Forbes: Microsoft's Midlife Crisis >

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