February 15, 2010 12:09 PM
Microsoft's chronic lack of innovation
Credit to Silicon Valley Insider for telling us what we thought we knew. Microsoft makes its money from yesterday’s products, fashioned in a pre-Internet age few of us can remember.
The first interesting thing about the graph published on the magazine’s site is that is measures profitability over time and therefore gives us an accurate picture of where the peaks have been for Microsoft’s core profit centres, the Windows OS, Office, and tools, over the last three years.
The second interesting thing is that all three have recently picked up into an historically large spike of profitability. Microsoft is still making serious money from products that are remarkably similar to the ones they were selling a decade ago, indeed two decades ago.
The third interesting thing is that Microsoft isn’t making money from anything it has decided to do in the last decade, entertainment, gaming, online services, and a clutch of non-entity devices such as the Zune. Mobile technologies, including the Windows Mobile Steve Ballmer will desperately try to reinvent this week at the Mobile World Congress, don’t even register on the scale.
Anyone looking at these graphs would conclude that Microsoft simply has no idea how to make money from anything invented within the time period of mobile ascendancy and the Internet.
Most journalists can spiel on until hell freezes over about why Microsoft can’t ‘do’ interesting stuff anymore, but mostly I think the reason is that the people who run it have just grown middle-aged. New things just aren’t as novel as they once were. It’s about the pragmatic task of keeping the shareholders happy and employees secure.
Hmmm. Apple didn’t get too middle-aged to borrow and improve on other people’s ideas. Perhaps this is an unfair comparison because Apple had one experience that Microsoft has not come near to having in its entire history: a brush with business death in the 1990s. Apple has preserved its sense of being the underdog ever since.
Does any of this matter? Perhaps not, but it’s hard to see the graph continuing to the right indefinitely. A crunch of some kind is coming. Microsoft needs a new challenge. Don’t we all.
The first interesting thing about the graph published on the magazine’s site is that is measures profitability over time and therefore gives us an accurate picture of where the peaks have been for Microsoft’s core profit centres, the Windows OS, Office, and tools, over the last three years.
The second interesting thing is that all three have recently picked up into an historically large spike of profitability. Microsoft is still making serious money from products that are remarkably similar to the ones they were selling a decade ago, indeed two decades ago.
The third interesting thing is that Microsoft isn’t making money from anything it has decided to do in the last decade, entertainment, gaming, online services, and a clutch of non-entity devices such as the Zune. Mobile technologies, including the Windows Mobile Steve Ballmer will desperately try to reinvent this week at the Mobile World Congress, don’t even register on the scale.
Anyone looking at these graphs would conclude that Microsoft simply has no idea how to make money from anything invented within the time period of mobile ascendancy and the Internet.
Most journalists can spiel on until hell freezes over about why Microsoft can’t ‘do’ interesting stuff anymore, but mostly I think the reason is that the people who run it have just grown middle-aged. New things just aren’t as novel as they once were. It’s about the pragmatic task of keeping the shareholders happy and employees secure.
Hmmm. Apple didn’t get too middle-aged to borrow and improve on other people’s ideas. Perhaps this is an unfair comparison because Apple had one experience that Microsoft has not come near to having in its entire history: a brush with business death in the 1990s. Apple has preserved its sense of being the underdog ever since.
Does any of this matter? Perhaps not, but it’s hard to see the graph continuing to the right indefinitely. A crunch of some kind is coming. Microsoft needs a new challenge. Don’t we all.
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