Weep not for Microsoft

The New York Times has an editorial about the state of Microsoft:

Steven Ballmer is going through a rough patch. Not only did the influential hedge fund manager David Einhorn call for him to step down from the top job at Microsoft, “to give someone else a chance”, Microsoft stock jumped right after he said it.
Investors’ frustration is not hard to understand. Over the last ten years, Microsoft’s stock price has flat-lined, as those of rivals Apple and Google soared. The biggest American company by market capitalization in the late 1990s, it was surpassed by Apple last year. Last month, IBM briefly overtook it for the first time in fifteen years.
This is probably little consolation, but Mr. Ballmer’s plight is an example of one of the core strengths of American capitalism: the ease with which new technologies emerge to challenge the most entrenched colossus.
Sure, Microsoft missed a few boats. It misunderstood the importance of Internet search. It’s missing the smartphone and tablet revolution. But figuring out the next big thing is not easy. Over the last 25 years the number of industrial companies in the S&P 500 has fallen by half.
Technology upends companies in different ways. It allows new firms to deliver better products and services in a more efficient way; it also creates new goods and services for consumers to want. Eastman Kodak, the fifth-biggest company in the S&P 500 in 1975, was almost destroyed by digital cameras, and is no longer in the index. General Motors, fifth biggest in 1985, was hobbled by rivals that could make more fuel efficient cars. Microsoft still rules the PC desktop. But that will matter less and less as users migrate to tablets and more computing takes place in “the cloud”.
There is another lesson in Microsoft’s long slide. It is about how far corporate behemoths will go to stop technology that threatens their dominance. Ten years ago, Microsoft tried to use its virtual monopoly of the operating system to strangle potential rivals and their new technologies. Fortunately, it failed. But the new rising behemoths will likely try similar tactics on whatever new gizmo challenges them.