Two articles caught my eye in the past two days, and thought I'd share the conclusion I've come to about them. First, was a blog entry by Paul Graham, who provocatively suggests "Microsoft is Dead":

"What killed [Microsoft]?... The most obvious is Google. There can only be one big man in town, and they're clearly it. Google is the most dangerous company now by far, in both the good and bad senses of the word."

While I think the title overstates the situation a bit (I'd replace "dead" with "hopelessly hamstrung"), it's an interesting read with some solid reasoning for the premise.

Then, this morning, the Seattle Times mentions that Microsoft is gobbling up real estate in Bellevue (Hey, downtown Bellevue: Make room for Microsoft), to house up to 4,000 employees (quick back of napkin math: 4K employees * $100K human resource cost (salaries, benefits, taxes, stock options, etc.) * 2 (assuming salaries are roughly 1/2 the cost of doing business)-- and you end up with what amounts to what is on the order of $800M of "opportunity cost").

So it seems Microsoft has either uncovered (only slightly less than literally) a gold mine, or they are preparing for "war of attrition" mode like they were when they sensed an impending threat from Netscape prior to the browser wars.

I conclude that Microsoft is "taking the gloves are off", and is getting ready to go to blows with Google. Maybe it was the bidding war for DoubleClick that finally motivated Microsoft to take notice?