Ten years ago Microsoft was a feared and fearful technology titan. It stood bowed but very much unbroken by an antitrust ruling in the US. A judge ruled that Microsoft's flagship Windows software enjoyed a monopoly – and that the company had exploited its dominance to crush its competitors. It had won the web browser wars. Although late to recognise the importance of the internet, the company quickly muscled aside the pioneering browser Netscape. It had seen off Apple, relegating its rival to the role of a boutique computer maker.
Yet, Microsoft's leaders were constantly looking over their shoulders. During the antitrust trial, Bill Gates repeatedly denied that Microsoft's dominance was unassailable. Expressing Silicon Valley's version of corporate Darwinism, Gates claimed that Microsoft could be brushed aside by the next guy in a garage. Roll forward 10 years to the launch this week of the latest version of its operating system, Windows 7, and some of Gates' fears have come to pass. True, Microsoft is still dominant in its market: Windows still powers more than 90% of consumer computers. However, it seems vulnerable. The threat came not from guys in a garage but from two students at Stanford – and from some old enemies.
The student project of Larry Page and Sergey Brin has grown into the multibillion-dollar search giant Google. Bill Gates's old nemesis Steve Jobs of Apple returned to relaunch his company. Now Apple is making record profits, and its computer sales growth is outpacing its mostly Microsoft-powered competitors. In contrast to Apple's soaring fortunes, Microsoft reported its first decline in revenue in its 23-year history this April as recession caused a fall in PC sales. To make things worse, over two and a half years, Apple has seen more success with the iPhone than Microsoft has to show for a full decade of its mobile efforts. The release of Windows 95 was a party, which featured the Rolling Stones' Start Me Up as the soundtrack. If Windows 7 had an anthem, it would have to be the theme from Rocky. Microsoft is a middle-aged tech giant that needs to start its fightback. The predecessor to Windows 7, Vista, was so unpopular that most users never bothered replacing Windows XP.
In sum, Microsoft has been unable to expand its continuing dominance in computers to the internet, games or gadgets. Operating systems are no longer the centre of the tech universe – and neither is Microsoft. Windows 7 feels like a necessary upgrade, not an exciting development. Microsoft is probably glad that it is less feared and draws less regulatory attention these days. But as with most midlife crises, what it really wants is its mojo back.