Fred Wilson just blogged about the "state" of Microsoft, moreover what he is calling Web 2.0. While I think Fred makes good points most of the time, he is missing the big picture here.

"But I am not so sure. I didn't go to PDC, I didn't work at Microsoft, I am not "technical", but my gut says that we are in a different place now and its going to be much harder for Bill to put this genie back in the bottle." - Your gut? This is exactly what people said about the Internet and Netscape.

"I think its because software is becoming "organic". I believe Google started this movement." - Ah no. "organic" software has been around forever. Archie, Veronica, IRC,etc. It's just now becoming mainstream as the technology makes it more usable.

"People ask me why all these smart developers are leaving Microsoft." - Have you compared this to the turnover at other large technology companies? Sun, Oracle, IBM, etc.? I think you might find that there is very little difference.

"They want open software, open source, open potential." - As a developer, I think open source is great! But having worked with a lot of normal computer users, they don't know let alone care what open source is. If the application/tool works for them, they use it. They don't care if it's open source or not.

Microsoft is staging themselves exactly where they need to be.
  • Extensive use of XML technology including RSS.
  • Advanced UI with features like WPF and WPF/E.
  • ORM bridging technologies like LINQ, and DLINQ.
  • Office improvments that leverage the new UI to make it extremely usable and powerful.
  • Speech and Ink technologies.
  • Presence in the home entertainment market via Media Center.
  • Pocket PC and Smartphone technology.
  • Comprehensive driver support and OEM relationships.
  • Huge developer base with vested interest in Win32/.NET technology

Come on! Are you kidding me? "But I can't see them at the top of the technology hill planting their flag again for the fourth time next year. It's just not going to happen that way this time." Oh wait. You mean that big hill in the middle of Indiana. Right, probably not. I'm guessing Fred has some companies in his portfolio that are competing with Microsoft (read Google). So a little wishful thinking might make him feel better. ;)