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Originally published October 15, 2007 at 12:00 AM | Page modified October 15, 2007 at 2:01 AM


Brier Dudley

As Microsoft goes, so goes Seattle

Not long ago, a lot of people in the Seattle area had a beef with Microsoft. They were infuriated by stock-option millionaires bidding up...

Seattle Times staff columnist

Not long ago, a lot of people in the Seattle area had a beef with Microsoft.

They were infuriated by stock-option millionaires bidding up real estate, pricing normal folks out of the housing market. Until they decided to sell to a Microsoftie, of course. Now the tables have turned.

Microsoft may not be minting millionaires anymore, but it's growing at a time when Seattle's glad for anything that can keep its housing market from crashing like in other parts of the country.

The company has buffered the region before. But the question I have, as we watch for darkening clouds, is whether Microsoft will have that same effect if the economy hits a truly rough patch in the future. It no longer has the same flexibility, now that its growth is slower, its investors are more restless and its latest venture — advertising — is more cyclical.

Microsoft really came through during the last downturn, after the dot-com bust and 9/11's effect on Boeing.

During that lean period from 2000 to 2003, Microsoft kept hiring and distributed its last big spurt of options, worth $11 billion locally. That softened the blow until the economy picked up, according to Dick Conway, who does economic analysis and forecasting for Microsoft and other companies.

"Microsoft has been playing that kind of role, a real growth force in the economy, for a long time, literally since it showed up in 1979 but particularly since 1990," he said.

Conway and the University of Washington's Economic Policy Research Center just updated an economic-impact study for the company. The numbers are stunning, especially because they don't count the way Microsoft revved its local growth since 2005.

From 1990 to 2004, Microsoft's direct and indirect economic effect was responsible for half of King County's employment growth, the report said. It said the livelihood of 233,220 people in the state depended on the company in 2004.

That's still nothing compared with the boom years in the 1990s, when Conway guesstimated Microsoft millionaires were boosting average home prices by 4 percent.

There's also the psychological effect the company's growth is having lately on planners, builders and homebuyers. The campus expansion started in 2005 guaranteed that the world's biggest software factory wasn't going anywhere and had room to grow for 20 years.

Microsoft's plan was to add the equivalent of three skyscrapers, creating space for up to 12,000 employees.


That project's going faster than expected. It should be done in five years instead of 20, according to Jim Stanton, the company's senior community-affairs manager dealing with development issues.

Microsoft now employs around 36,000 people here, up from around 28,000 in 2004. With salaries averaging above $145,000, it's no wonder this housing market took so long to start sputtering.

But that's all yesterday. What can we expect from Microsoft in the future? Conway thinks job growth at Microsoft and Boeing will level off in 2009 or 2010, and things may get difficult in 2011.

By then, we'll know the outcome of Microsoft's big bets on digital entertainment, advertising and Web services, ventures now filling those buildings.

I'm not saying people here should switch to Microsoft's Live Search and buy a Zune. The company's fate is way beyond the control of people in Washington state and probably Washington, D.C.

I'm just wondering how long it's going to last.

Brier Dudley's column appears Mondays. Reach him at 206-515-5687 or

Copyright © 2007 The Seattle Times Company

About Brier Dudley
Brier Dudley offers a critical look at technology and business issues affecting the Northwest. | 206-515-5687

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