There is an article in the Seattle Weekly that makes an interesting point about Microsoft's success and fate being tied to the personal computer. It makes this argument by pointing out that while Microsoft has had success in branching out into other areas related to the PC (eg. mice, keyboards, and even gaming consoles), it has yet to make an impact in other emerging areas such as interactive television and smart phones. It then makes the point that like IBM's fate and success was tied to the mainframe, Microsoft's fate might be tied to the PC.

It's a fair point given that the majority of Microsoft's revenue and more importantly, profits, come from the Office suite and Windows. You have to wonder what Microsoft would be like if you took these two products away. Like the decline of mainframes, the PC is going to be phased out sooner or later. If PC's morph into specialized devices (eg. smart phones, PDAs), you could end up with devices that do not require a general purpose operating system like Windows, which could lead to a significantly smaller revenue stream from Windows. Word processors and spreadsheets are already at the point where the majority of the functionality is unused by most people. What is going to keep people upgrading to the latest and greatest version of Office?

Now with $49 Billion in cash, Microsof still has time to figure out how they will continue to generate increasing revenues and profits in a post-PC world. It's kinda like the challenge that Arab countries must face with their oil driven economy. The money is flowing now, thanks to oil, but you know it's going to stop flowing one day. What happens when the world switches to hydrogen fuel or some other alternate power source that doesn't rely on fossil fuels?