Microsoft Trumps Google, Yahoo! R&D Budgets

Rob writes to mention a Computer Business Review Online article on Microsoft's commitment to out-spend Google and Yahoo! on innovation in the coming year. From the article: "Microsoft Corp will spend over $1bn on R&D just in its MSN unit, for the fiscal year starting in July, chief executive Steve Ballmer told an audience of would-be advertising customers. The money, part of the surprise spending package that recently gave Microsoft's share price its biggest single-day drop in five years, comes as the company struggles to catch up to Yahoo! Inc and Google Inc in the search and online advertising market."

Comments

Money as a constraint

[blenderking]

I like the approach 37 Signals takes in discussing constraints. Microsoft has all the money in the world, so to speak and perhaps that's a hindrence to them actually. There was an article a month or so back about that fact that Apple spent so little on R&D relative to revenues and some critics thought this was a big problem (like what's next after the Ipod?) R&D spending as a % is meaningless - it's how it's spent - the objectives, the creativity, the entrpeneriual spirit that matters. Google's mandate to spend 20% on your own projects is a great example of the right kind of spirit and probably costs the company little. Theoretically, Microsoft should be cleaning up in any market they enter just be throwing enough money at the situation. And that, is the core of the problem - thinking that way doesn't put a contraint on making the most of human capital. They have unlimited money and unlimited time - they're not being forced into making the best decisions (except of course, when they feel real competition - that seems to be their only real motivator...)

Happy Cinco de Mayo!

Microsoft R&D == Roach Motel

[Eponymous Coward]

I've heard MS Research described as a roach motel. They employ *lots* of extremely talented people. But it seems that once they check in, they never check out. You see them at conferences and the odd paper trickles out, but they definitely tend to drop off the radar.

I've always wondered what happens to these formerly incredibly productive people. Are they stuck in bureaucratic hell? Are they working on stuff so far into the theoretical that products are years off? Or is it the ultimate cushy job and they just get fat drinking free snapple behind their closed door?

It's true they do surface from time-to-time (like Anders Hejlberg) so you know they are working on something, but this happens so rarely you have to wonder what the hell is going on in there. Why do they get such a lousy return from their huge R&D budget?

-ec