Slashdot Log In
Microsoft Accused of Squandering Billions On R&D
Posted by
kdawson
on Tue Feb 10, 2009 05:44 PM
from the billion-here-billion-there dept.
from the billion-here-billion-there dept.
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."
Related Stories
[+]
Technology: Roundup of Microsoft Research At TechFest 2009 123 comments
An anonymous reader writes "Ars Technica has a very thorough post of some of the technologies that Microsoft researchers showed off at TechFest last week. 'The exact number of projects that were demonstrated at TechFest 2009 is not clear, but here's a quick rundown of about 35 research projects that haven't received much coverage, accompanied by links that will let you further explore if your interest is piqued. Remember that these are concepts and prototypes, not finished products, and they may never end up becoming anything significant.'" While Microsoft has been criticized for squandering a fortune on R&D, there can be no doubt that they are showing off some cool tech here.
This discussion has been archived.
No new comments can be posted.
The Fine Print: The following comments are owned by whoever posted them. We are not responsible for them in any way.
Full
Abbreviated
Hidden
Loading... please wait.
Bill Gates? (Score:5, Informative)
Re:Bill Gates? (Score:5, Informative)
He's still chairman of the board.
Parent
Re:Bill Gates? (Score:5, Funny)
Why is this modded funny - he is still chairman of the board!
Parent
Re:Bill Gates? (Score:5, Funny)
Parent
Re:Bill Gates? (Score:5, Funny)
Or maybe someone just decided to mod everything in this thread Funny?
Parent
Re:Bill Gates? (Score:5, Funny)
Parent
Re:Bill Gates? (Score:5, Funny)
Parent
Re:Bill Gates? (Score:5, Interesting)
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.
Parent
Re:Bill Gates? (Score:5, Insightful)
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.
A tech company investing in R&D, or even doing a bit of skunk works is not "frivolous". It is precisely aligned with a long view goal of maximizing profits and increasing shareholder value. The directors have a lot of leeway if this is all you have got to sue them on.
Parent
Re:Bill Gates? (Score:5, Insightful)
Spending money on R&D is not the same as "spending frivolously." The whole point of R&D is to experiment with new technologies, some of which pay off, some of which don't.
Kudos to Microsoft for actually investing in their future, rather than sitting on the cash pile. To hell with the whinging "investors" who expect money for free.
Parent
Re:Bill Gates? (Score:5, Funny)
Parent
Ballmer's Xbox Fiasco, Search Insanity, And Others (Score:5, Interesting)
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.
Parent
Re:Ballmer's Xbox Fiasco, Search Insanity, And Oth (Score:5, Interesting)
Parent
Re:Bill Gates? (Score:5, Funny)
(...)
$ ls -l
brwxr-xr-- ballmer execs 4 1954-11-03 20:31
$ echo "So thats what the problem is"
Kernel Panic - not syncing
WTF
Parent
Re:Bill Gates? (Score:5, Funny)
Agreed, bashing Microsoft is inappropriate. But Python isn't the answer.
Microsoft should perled, for only then can you say
.
Parent
Death march (Score:5, Insightful)
Since Mr. Gates owns so much of MS, I personally doubt this will happen, but if MS concedes and then begins to cut back on R&D, I'll start to believe those that say that the days of MS are numbered.
Re:Death march (Score:5, Funny)
These days Gates only owns about 8% of MSFT. He probably has greater influence than his ownership. At $10,000 apiece, all MSFT has to do is sell 800,000 Surface tables and they've got their money back. I mean who doesn't want a big-ass kiosk in their home. :P
Parent
If their R&D... (Score:5, Insightful)
At $10,000 apiece, all MSFT has to do is sell 800,000 Surface tables and they've got their money back. I mean who doesn't want a big-ass kiosk in their home.
If their R&D has let them figure out a way to make $10,000 items which have a zero cost of goods, and don't have any marketing or support costs, they've got it made.
Parent
a lot of .NET development has been (Score:5, Informative)
A bunch of the .NET languages, runtimes, and compiler features originated in or were developed closely with Microsoft Research, and some parts (like F#) were almost wholly developed there.
Although it's not very much liked by Slashdotters, Songsmith [microsoft.com] has also been relatively successful. Kodu [microsoft.com] is also getting a reasonable amount of press, and helping to solidify XNA's lead in the education-via-games space.
More generally, they develop prototypes of a lot of ideas that get reimplemented by the "product" side of the company. For example, MSR has been experimenting with adding machine-learning and data-mining features to MS desktop products for years, something that the product group is now starting to do with Excel. Those sorts of things are harder to quantify of course--- did the MSR experiments in that area help the product team at all? Would they have done the same anyway? Hard to say, but in general I think the advantages of having an R&D division in your company are undercounted in these "soft gains" ways, which is one reason that once companies downside their R&D divisions, the product groups stop producing as many new things as well.
Parent
while I don't have a lot of inside knowledge (Score:5, Insightful)
My understanding is that until recently one of the big purposes of MS Research was just prestige, not really product production. MSR has consistently produced a very large amount of academic research in some key areas, e.g. almost always accounting for more than 10% of the papers at SIGGRAPH, year in and year out. Microsoft management was of the opinion that having something like that was useful to their business in indirect ways, even if those SIGGRAPH papers didn't directly lead to deals with CG film companies or anything. Is that true? I have no idea; it's kind of hard to measure intangibles like whether having a prestigious research group attached to your company increased your reputation to the point where it tipped the balance on an important sale or contract.
I think they were also going for the Bell Labs model, where the research group pays for itself if it's left to its own devices and very occasionally invents/patents something big. I have no idea what MSR's patent portfolio is like from a business perspective. Have they licensed any significant percentage of it? More intangibly, what proportion of Microsoft's defensive patent portfolio originated from MSR?
And finally, one of the unofficial purposes of MSR for years was just to hire up everyone so nobody else could. Microsoft had a dominant lead in a number of areas, and one way to protect that is just to deny all your competitors access to talent. Kind of the model Google is currently using (they hardly need 20,000 employees otherwise).
Parent
Re:Death march (Score:5, Informative)
It's also not new, as static analysis has existed in various forms for quite a while (lint is a form of static analysis).
The work that the SDV is based off of is called SLAM, and it was as much an advance to the field of static analysis as anything people do today is.
Take a look at the publication list [microsoft.com] from the SLAM project. The research that has gone into it has seen publication in POPL twice (along with PLDI one of the two top-tier conferences in PL), CAV three times (also extremely good), and many other venues.
The BLAST project, which is in some sense a successor to SLAM (not at MSR work), has seen quite a bit of additional publications.
You quite clearly don't know what you're talking about; PL is my research area, so I somewhat do.
Microsoft Research is one of only a couple industry research labs that publishes research of similar quality and quantity to a good research university (another is IBM; Google definitely doesn't). I am much less opposed to MS than most people at /., but I will steadfastly defend MSR.
Parent
Stalemate. (Score:5, Insightful)
Re:Stalemate. (Score:5, Insightful)
It's not against antitrust laws to simply be a large company. And it's not against antitrust laws for a large company to simply grow either.
Parent
Re:Stalemate. (Score:5, Funny)
Well, there's always dividends... If Apple can do it on half the budget, and Linux can do it on what, 1/100th the budget (veeeery rough estimation, folks)?
Maybe what they need to do is to point their R&D in better directions, shake up its staff hard (starting at the top), and roll the rest into dividends.
This way the shareholders will be less sue-happy, they don't fall afoul of monopoly concerns, and they might even get a bit of profit out of all that innovation they keep talking about. We also get better and/or decent new products as a side-benefit.
I know, too much to ask and all, but they're going to have to do something, what with their marketshare shrinking and all...
Parent
Re:Stalemate. (Score:5, Insightful)
On one hand it must keep evolving and changing to attempt to be better than Linux and Apple
That's not the Microsoft I know. The Microsoft I've come to know focuses on (a) maintaining its dominance in the office environment and (b) imitating other technologies' success stories as quickly as possible. That's not evolving, that's mimicry.
Parent
They aren't investors (Score:5, Insightful)
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.
Investors know that sometimes things won't pay out. These are the whiny little 10%-return-no-risk assholes who sue when a CEO doesn't start layoffs ASAP to pump up the stock price.
Here's news for you: sometimes weird investments pay off in radically unforeseeable ways. If you're the kind of jackass who dismissed the idea because we already had vacuum tubes, then you're the same kind who thinks modern R&D is a waste of money.
As much as I dislove Microsoft, I'm glad they're doing this stuff. Apparently they understand the importance even if a few short term profit-takers are too stupid to see it.
Re:They aren't investors (Score:5, Interesting)
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.
Parent
Re:They aren't investors (Score:5, Insightful)
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.
Investors know that sometimes things won't pay out. These are the whiny little 10%-return-no-risk assholes who sue when a CEO doesn't start layoffs ASAP to pump up the stock price.
Here's news for you: sometimes weird investments pay off in radically unforeseeable ways. If you're the kind of jackass who dismissed the idea because we already had vacuum tubes, then you're the same kind who thinks modern R&D is a waste of money.
As much as I dislove Microsoft, I'm glad they're doing this stuff. Apparently they understand the importance even if a few short term profit-takers are too stupid to see it.
They're welcome to sell their shares if they don't like it.
When you get as big as Microsoft (as in, you've saturated your market) you've got to _create_ new markets to sell to. This is why they dump so much into R&D.
If they want to fuss at MS they should fuss about the guys that came by the office the other day. They do pretty much nothing but drive around to different people that purchase Microsoft Server licenses and tell them "Eh? Go read the documentation, it's all in that book we gave you. No, sorry, we can't do that, this is how the product works and if you don't like it, too bad." IE, they do nothing. They make ~$500K each and tether their laptops to their cellphone and play WoW all day while not telling clients to figure it out.
There probably aren't many of those guys though.
Parent
Re:They aren't investors (Score:5, Informative)
Well, here's an anecdote.
6 or 7 years ago, when I was a low[er] level QA person at MSFT, I had a recurring meeting with someone from MSR because my division was using the new binary analysis and instrumentation tools that they had cooked up. I was one of the people implementing that toolchain in our production and testing process.
Now every product and every team at Microsoft uses that toolset.
Every year, MSR holds "Techfest", which is kind of like the science fair, except all of the experiments are awesome. MSR folks setup boothes/demos etc to show off what they've been up to. Normal MS employees attend this thing to allow for exactly the sort of informal, node-to-node idea exchange that ends up building the bridges from academia to engineering that you posit must not exist. And that is just one mechanism -- one that is accessible to low-level people in product groups for them to learn _what_ interesting things are happening, and who is doing them, and how to stay abreast of what's going on there.
I had an email conversation last month with someone at MSR who does visualization reseach about the publicly-downloadable visualization controls. I'm using them in one of my internal reporting tools and have some feature asks and was explaining some of the problems I'm having with the currently released bits. They've got new stuff they've been working on that will probably help me out when it's ready, and now they're aware of one more "real-world" use case for visualuzations of the type they're working on.
I'm a nobody, leaf-node QA engineer. And I've had interactions with MSR that have made my job better and easier, and the products I've worked on better.
Parent
Re:They aren't investors (Score:5, Insightful)
Actually, ClearType came from R&D. You have to admit, it's pretty necessary in order for LCD monitors to take off.
Their handwriting recognition IME's did too.
In fact, *tons* of stuff that's in Windows and Office came out of MS R&D. It's just not that flashy.
Of course, tons more didn't. But that's how R&D goes.
Parent
Re:They aren't investors (Score:5, Informative)
C# and .NET were born out of the COOL project. COOL was a engineering response to Sun's lawsuit over Microsoft's attempts to extend Java in incompatible ways. Microsoft Research was never involved in the development of .NET.
Parent
Re:They aren't investors (Score:5, Insightful)
It's worth pointing out that though COOL may not have been out of Microsoft Research (the speech-recognizing Singularity-coders), it almost certainly was under the R&D bottom line in MS's accounting, and the size of the R&D bottomline is what has the investors pissed. I don't think these particular investors would know "Microsoft Research," that of Singularity and Speech Recognition, from Adam.
Parent
A dangerous precedent (Score:5, Interesting)
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.
Re:A dangerous precedent (Score:5, Informative)
Xerox is a good example of this. However, the other two are less good. You mention that 3M doesn't have a particularly large research arm separate from their manufacturing R&D. As for Bell Labs, remember that at the time it was truly ferocious, it wasn't allowed to do much with their technology because of the company's regulated monopoly status. They could develop UNIX for internal use all they wanted (and transistors and routing algorithms and...), but they couldn't actually sell it outside the Bell System. And by the time they could sell it externally, it wasn't like they had anyone left who could have productized or sold it for them.
In reality, corporate R&D has been dying for the last thirty years, except in the military space. It's a shame because the investors are simply eating the seed corn from which new products could have sprung.
Parent
What?!? (Score:5, Funny)
MS Needs R&D (Score:5, Insightful)
MS is moving to the edge of bubble, they need to either realize that they are becoming the next IBM and begin to move away from the desktop market into server/solutions development; or begin to become more of a consumer electronics company, which would require creating "good" consumer electronics and be competitive in that market, not use it as a loss-leader to harm their competitors or further intrench their Windows position. Desktop computing in the past 3-4 years has offered very little that is groundbreaking for the average user, and the best-of-the best in '01 is still good enough for most people. PC manufacturers aren't seeing major growth, only sales in "back-to-school" periods where students become first time buyers rather than using mom & dads aging box, or replacement when existing boxes fail; which more and more consumers and companies are working to reduce.
In a strapped market, where people are much more willing part with hard earned dollars for 6 more inches on their screen with HD more than chips 400MHz faster (but feel slower on bloated software), MS needs to find a new market that they can win, and win big in; or they are going to see their share decreasing.
Shareholder, huh? (Score:5, Interesting)
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 [msn.com], institutions (which are generally very passive owners) own over a billion shares [msn.com], and mutual funds (mostly owned indirectly by you and me through 401k plans - also very passive owners) own a substantial amount [msn.com], 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.
Blaming Bill Gates??? (Score:5, Funny)
From TFA:
Dude! You loaded up on the stock of a company whose products you don't even like, and watched it lose half its value without liquidating your position, and you're blaming Bill Gates for your problems???
MS-Shareholders are short sighted (Score:5, Funny)
Sometimes R&D isn't R&D (Score:5, Informative)
Depending on how Microsoft classifies it's workforce, this may be a simple labeling issue, Many companies call future development work R&D for tax purposes. I believe you can deduct or amortize part of your R&D budget. So, Windows 8 may very well be "R&D".
An ounce of truth, but the wrong argument (Score:5, Informative)
As a [remaining -- for now] Microsoft employee, I can tell you that there is lots of stuff going on here that gets cancelled. Things do not always pan out.
There are probably projects and people that could be cut. MS could probably be more efficient.
Generally, I've seen good technology and near-finished products get killed for political reasons. That work tends not to be completely lost, however. Near-produts tend to have their interesting technologies teased apart, refactored, and re-incorporated into future MS offerings.
However, much as I malign them, I trust the various managers within MSFT to make R&D and strategy decisions over some dipshit that owns 200 shares of MSFT and is irate that he's not seeing '95->'99 era stock price appreciation.
The MSFT stock has been garbage for a long time -- and I am sure I own more of it than the average complainer. Microsoft has always spent money all over the place because real progress takes investment. The company continues to be highly profitable and doesn't appear to need micromanagement from people looking to get rich via stock speculation.
I haven't carefully analyzed the ramifications, but I am at least emotionally drawn towards the idea of MSFT rebuying _all_ of its public stock and telling the market to FOAD.
Last I checked our market cap was down in the $200B range, so I don't think that's a plausible option, given our cash position.
4 MSR-initiated products off the top of my head (Score:5, Informative)
- Parallel Extensions to .NET
- Surface
- Photosynth
- WorldWide Telescope
I don't know if Parallel Extensions is worth $8 billion, but it's a huge deal and the cornerstone of the ManyCore/Multicore work MS is doing. It's pretty freaking cool. (And the Mono folks have already implemented it...)
Microsoft's fountain is polluted (Score:5, Interesting)
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...
Re:Me thinks... (Score:5, Funny)
Keep going, you almost had a fresh prince going there.
Parent
Re:Budget (Score:5, Interesting)
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.
Parent
Re:Budget (Score:5, Insightful)
I think it crosses over to the development team. When you first hear about a new version of Windows, it generally has some features that actually sound cool.
Then management cuts the features and all that's left is the previous version of Windows with a new interface. That's where the crossover is failing.
Parent
Re:Apple isn't even spending that (Score:5, Insightful)
Yeah, that $150 million realllllllly is what made the difference, at a time when Apple had $4 billion in the bank.
I believe it was more the commitment about bringing Office and IE to the mac + giving Apple some good news to spread around. Make investors happy ya know, so they won't demand those 4 bill paid out in cash.
Parent
Re:Apple isn't even spending that (Score:5, Insightful)
And finally, academia and computer science research shouldn't be beholden to any corporate entity. Our institutions should be funded by the government. The ideas should be public property.
Parent
Re:R does not have to be impractical (Score:5, Insightful)
Contributing to open source projects is not research; it is development focused on open-source products instead of closed-source products. Research would be developing new ways to improve operating systems, compilers, and web servers, for example, based on certain criteria (performance, security, design, etc.). For example, Plan 9 is a research project. There is plenty of research in academia and industry that are geared toward solving real-world problems. For example, many of the advances in computer hardware, such as deep pipelines and multicore processors, started out as research problems. But contributing to an open source project is different from research. I fail to see how contributing to GCC or WebKit per se solves any problems in computer science, which is the definition of research, unless those contributions are a result of research.
Parent
do you like computer graphics or CG films? (Score:5, Interesting)
Microsoft Research consistently accounts for approximately 15% of the papers presented at SIGGRAPH every year.
Parent