Killer Innovations: reblog

Sadagopan's Weblog on Emerging Technologies offers a comprehensive review of Analysts Day at Microsoft, which featured presentations from Ray Ozzie and Craig Mundie. While Ray Ozzie focused on the major trends that are impacting innovation strategy at Microsoft, Craig Mundie drilled down on the R&D numbers at Microsoft: "Craig Mundie’s presentation tabulates the reported R&D investments amongst the technology majors. Shocking, to say the least, when seen together. He points out that big changes take time and effort and highlights the type of innovation that Microsoft is after – on the disruptive, responsive and sustained spectrum."

Yet, is this impressive amount of spending on R&D by Microsoft really paying off? As Sadagopan exlains, "one does not necessarily need to spend about five billion in R&D to find that the next big thing does not exist..." Microsoft should keep in mind that growing market competition, not growing R&D spending, is what drives innovation:

"Microsoft spending details is not helping them win the respect of the tech watching community. Innovation on the products/services that most of what the world associates with Microsoft (centered on the desktop) is seen happening in the sustained category – precisely where many see Microsoft to be ineffective/slow moving and seen to be losing ground (MSN search?). Not that it has set the market on fire through disruptive innovation - if anything in the mobile/pervasive/CES space, it is seen that others are defining the agenda. While some cyclical investment surge is understandable – what we are seeing is a trend of progressive increase in spending. Paul Kedrosky points out that Google has added over a $100-billion in market capitalization during the period, while Microsoft has shed around $30-billion in market cap. Similarly, Apple has added around 30-billion in market cap, while IBM has shed around $20-billion."

Tags: innovation Microsoft R&D

[image: Cumulative R&D investment since 2000]