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Microsoft Accused of Squandering Billions On R&D
Julie188 writes "Even as Microsoft celebrates its 10,000th patent, angry shareholders are starting to speak out against what they say is the squandering of billions of dollars on pointless R&D projects. The 10,000th patent covers a technology that allows a device to associate data with objects placed on its surface, and is likely eventually to become part of the Surface table PC. But shareholders are fed up with the $8 billion annually spent. Said one, 'I believe Bill Gates is a charlatan because what he has said, implied, promised to shareholders and stakeholders and all of these visionary things that he mumbles and jumbles about and doesn't make reality of. MS is spending billions of dollars on R&D. Where is the return on investment?' In contrast, Apple had almost the same revenue gains as Microsoft while spending one-tenth as much."
This has less to do with Bill Gates mumbling and jumbling and more to do with the stock market tumbling and tumbling.
People who bite the hand that feeds them usually lick the boot that kicks them
Bell Labs, Xerox PARC, IBM's various research labs, 3M's research and others have all generated wonderful new things from their basic research. Google is just one company that encourages employees to spend a portion of their work time on personal research projects.
And now as we bemoan the "next-quarter" mentality of corporate officers and the decimation of basic research, along comes this bunch.
If corporations can't do basic research for fear of being sued, we might as well just pack up our remaining industry and ship it overseas right now.
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"You are not remembered for doing what is expected of you." - Atul Chitnis
If you're the kind of jackass who dismissed the idea of transistors because we already had vacuum tubes
Darn it, hit Submit too quickly.
Dewey, what part of this looks like authorities should be involved?
Here's the key issue: There's little evidence that anything useful has come out of Microsoft Research. Ever. They fund a lot of pie in the sky projects, with the resulting technology appearing to sit on the shelf indefinitely. A very odd situation for a technology company.
I've stated this before and I'll state it again. I often think that Microsoft Research is a way for MS to keep the top researchers away from the competition. Microsoft themselves doesn't have anything to do with them, so they simply let them to their research while ignoring their results.
Imagine for a moment if PageRank was developed at Microsoft Research rather than at Stanford? It never would have amounted to anything. In fact, it would be a forgotten paper filed away in CiteSeer.
Javascript + Nintendo DSi = DSiCade
I wouldn't say their R&D budget goes into patents and lawyers. In the actual academic world, Microsoft Research is a very common institution to see on papers. They employ a lot of smart people who are coming up with a lot of good and useful ideas.
But there does seem to be a disconnect. Very little seems to crossover from their research people to the development teams.
In agreement is shareholder Mike McDonald. McDonald owns 118,000 shares of Microsoft, bought in 2000 at an average price of $36 share (adjusted for splits and dividend payouts).
118K shares huh? Well, that's certainly a lot of money to me and probably most people reading this, but considering the fact that 8.89BILLION shares are outstanding, Bill Gates owns ~766MM, institutions (which are generally very passive owners) own over a billion shares, and mutual funds (mostly owned indirectly by you and me through 401k plans - also very passive owners) own a substantial amount, I'm thinking MS is not too worried about this.
Personally, I'm a little more concerned with the bank stocks I own (a small pittance of, also through my 401k) and what they're doing. If there's a fight to be picked on Wall Street these days, it's with the management at banks which is currently raping us for our money, not with a company that is unsuccessfully trying to conduct R&D.
If you dislike where MS is going so much, don't be an idiot and complain that they should stop their R&D... just sell your stock! If I've got a problem with the banks insisting on hundreds of billions of dollars AND billions in bonuses, THAT'S a problem worth complaining about.
If you can read this... 01110101 01110010 00100000 01100001 00100000 01100111 01100101 01100101 01101011
Back in the late 1990s and earlier Microsoft's business plan was much simpler: "Windows Everywhere" was the motto and battle cry. Once the stock peaked and Windows had long hit saturation in the big computer markets things became more complicated. That was right around Gates handed things over to Ballmer.
However, that doesn't excuse Ballmer for the massive failure of leadership and execution during his tenure.
The 8+ billion dollar Xbox fiasco.
The mind bogglingly poor execution of the search team
The total flop of the Zune
The equally mind bogglingly poor result of MSN/online
People have described Ballmer having created a "Culture of Failure" at Microsoft. A culture that embraces throwing billions of dollars at a bad project of idea over a million dollars at an equally bad project or idea.
Ballmer seems to have a business plan that is simply nothing more than to "Kick Ass".
The hit to the Windows profits have been a wake up call to everyone at Microsoft. The days of feeling like Windows and Office would be an never ending flow of cash to throw at anything and everything are over.
The cuts we've seen so far are nothing. Ballmer is still of the mindset of trying to cut as little as possible to appease the Street. Until he is gone Microsoft will continue to flounder and slide sideways to lower.
Loser products like the Zune hardware are on the way out. The Xbox fiasco is most likely next to get the axe. Search and the online services messes need to be given a short timeline to get their act together or be axed.
Microsoft has really got their shit together with the security and stability of Windows. A Microsoft with a visionary and competent leader could be a giant nightmare for Linux and Apple.
I mean, can you seriously name one product that's come out of MS R&D that counts as a success (discount anything that's a blatant knockoff of a pre-existing product, embrace and extend/extinguish is not R&D)?
The Static Driver Verifier. Okay, so it's given away free with the DDK, but it indirectly helps them since driver quality is now by far the main stability problem Windows has.
So.... at the next shareholder meeting get rid of the guy!
Members of the board of directors are directly appointed to their positions (including the chair!) by the shareholders themselves. So in this case, the shareholders have nobody to complain about but themselves.
They could refer to the company charter, which often has a phrase where the primary objective of the company is "to maximize profits and increase shareholder value". If that is the case for Microsoft (I have no reason to not think so here), the directors are violating a primary tenant of their charter if they spend money frivolously. From this it would be the basis of a lawsuit by violating the basic charter of the company and its legal right to exist.
BTW, corporate charters don't have to have this clause in their charter, nor is it really necessary with even a for-profit and publicly traded company to be so focused on profits. The problem is that this is so typical that many investors won't put money into a company unless this is explicitly in the charter. Ben and Jerry's Ice Cream is one of the companies I know of that is publicly traded but does not have this in the corporate charter.... but companies like this are an exception.
Microsoft Research consistently accounts for approximately 15% of the papers presented at SIGGRAPH every year.
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They are dominating the high-end console space, with Wii dominating the low-end. The PS3 is a clear 3rd, and will probably not catch up. It might all change with the next generation, though.
I'm tired of splitting hairs to find reasons to make Microsoft look bad. This type of submission is equivalent to tabloid shit and doesn't warrant hundreds of comments, even the same comments as last time someone put Microsoft under a microscope.
Good for Apple, bad for Microsoft, let the shareholders figure it out; now throw this submission under idle and let's continue onto better spent time...
It's more than one investor, as evidenced by Microsoft's decreasing stock price despite a huge stock buyback program. Lots of investors have taken their cash elsewhere.
Think what you want, but don't be surprised if Microsoft starts to rethink its R&D spending. Microsoft's stock has been flat or down even during the previous good years, and now that the economy is in the toilet its investors are going to start to wonder why they are financing so much R&D with so little to show for their investment.