Microsoft Accused of Squandering Billions On R&D 580
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."
Me thinks... (Score:4, Interesting)
This has less to do with Bill Gates mumbling and jumbling and more to do with the stock market tumbling and tumbling.
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: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.
Re:They aren't investors (Score:3, Interesting)
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.
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.
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.
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.
Re:Death march (Score:3, Interesting)
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.
Re:Apple isn't even spending that (Score:2, Interesting)
If you look at what was going on at Apple immediately prior to that bail-out, it was being run (into the ground) by one of those "next quarter profit at all future cost" CEOs.
Apple was profitable under him for one quarter. Than lost money until they brought Jobs back. The "DoJ induced Apple bailout" was coincident with Jobs return as the iCEO. (When that meant "interim" and not "Internet" like they claimed on the iMac....)
One of the things he did was cut back on development; basically they were taking 68K system designs and slamming a PowerPC on the board and wondering why everyone said they sucked.
And he opened up competition, hoping the competitors would make low-end machines like PC cloners do. So the competitors went and made high-end machines and killed Apple's profits. Why make low-margin crap if you don't have to?
Not to claim that the high-end Macs of the day weren't massive underperformers... though with System 7 it was hard to get any use of a powerful system.
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.
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.
Re:Death march (Score:3, Interesting)
Re:Ballmer's Xbox Fiasco, Search Insanity, And Oth (Score:5, Interesting)
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...
Just to be fair: (Score:3, Interesting)
You cant compare the R&D budgets of apple and Microsoft as their product lines are far different.
Microsoft has 1000's of applications across several markets, apple has 100's ( if that ) across a handful of markets.
Its almost like comparing Tesla Motors to GM...
actually, Microsoft's investors disagree (Score:3, Interesting)
One tiny Microsoft investor, who admittedly doesn't even like their products, objects to their current strategy. Much, much larger Microsoft investors, such as Bill Gates, disagree with him. Since they own the company and this guy does not, their say wins out.
If he does represent a majority of Microsoft shareholders, he can of course propose a shareholder resolution and try to outvote Bill Gates at the shareholder meeting, or even replace the current MSFT directors with a new slate.
Re:Bill Gates? (Score:3, Interesting)
No, they're elected at shareholder meetings. Slightly different, but I agree that if the shareholders don't like what the board of directors is doing, it's their own damned fault for electing them.
Re:Ballmer's Xbox Fiasco, Search Insanity, And Oth (Score:3, Interesting)
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.
That's a dubious distinction, if they're not making any money by doing so. The number of warranty repairs they've had to make is astounding.
And who cares about high or low-end? A 360 is barely more expensive than a Wii, and should theoretically be capable of everything that the Wii is, if it's a "high-end" machine (it's not, but that doesn't change the fact that neither Sony nor Microsoft have even attempted to capture part of Nintendo's marketshare). From the investor's point of view, the Wii has completely dominated anything that Microsoft or Sony have been able to conjure up.
Re:actually, Microsoft's investors disagree (Score:4, Interesting)
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.
Re:a lot of .NET development has been (Score:3, Interesting)
Nothing in .NET is new so I don't really see how much research would have been necessary to produce it. I'll give partial credit for F# as even though functional languages aren't new (no matter how you slice it) a modern implementation build on top of a pseudo VM like CLR is at least semi-novel.
Speaking of functional languages - keep in mind that two (maybe more?) lead developers of the Glasgow Haskell Compiler are full-time Microsoft Research employees. Specifically, it's Simon Peyton-Jones, who is also a coauthor of the original Haskell spec.
Now you say that nothing in .NET is new, but what about the features that got at least in part borrowed from Haskell (such as lambdas and LINQ)? No-one's saying that .NET was cooked up in MSR; but there is definitely a steady flow of ideas from various MSR projects (or those that MSR contributes to) to .NET.
finally realizing it's been snakeoil all along (Score:3, Interesting)
wow, it's taken "shareholders" this long to figure out it's all been a sham? Windows is what brings in over 80% of the revenues and billions a blown year after year on money losing ventures and that thing they call R&D. R&D is a really nice black hole to hide and move money around too. I remember a few years back when MSFT cut R&D by 50%( down to ~$3.2billioin from ~$6.4billion ) and magically a bunch of the other divisions showed profits for the first time. A couple of quarters later they were back to losing $100s of millions each.
The whole company is running on the 20 year old monopoly and they don't have any clue how to make a profit outside of Windows. And it sounds like shareholders are finally getting sick of this now that it's been something like 8 years with little value/growth and Vista, well I'm guessing that's pissing them off too. It also doesn't help when little Apple can launch products, v1.0 products I might add, and they are fantastically profitable.
LoB
Re:Stalemate. (Score:3, Interesting)
Microsoft's problem isn't motivation or money, its size. Microsoft is too large, there's too much internal bureaucracy, too many people need to be involved with each project and this limits how fast the organisation can move on any given project. Microsoft cannot move in unexpected directions, with the great beast labouring for breath one big jump could kill it.
/. groupthink Apple have not made great strides in R&D, most of their products are minor variations on existing iDea's put inside a shiny white case, they have become very successful doing this. Linux has 100,000 entities all working independently, some towards common goals but there is no central structure or hive mind type mentalities that are prevalent in Apple's and Microsoft's R&D.
Apple is small and singularly focused, despite the
Linux can move unexpectedly, or remain stagnant. Linux moves organically as its not centrally organised allowing for rapid evolution. Large corporate R&D suffers from the Red Queen Effect [wikipedia.org] where they have to keep moving just to stay where they are, if they start to slow down (stop spending on Development) they risk their own demise. Linux doesn't have this problem as much as Microsoft or Apple, some OSS projects die, others survive. Linux is an organic system where distros and projects play out a Darwinian-esque struggle for finite resources, if MS or Apple tried this style of unrestricted R&D they would be lost due to the fact that there is no hard limit on resources until the companies destruction.
If we put a cost against the man hours given by FOSS developers, the cost of development is quiet high. At least 1/4 of what MS spends. The biggest advantage of FOSS development is that there is almost never a need to re-develop the wheel (as in the same code to produce the same functionality), once something is made it can be used by all. A great deal of R&D is wasted re-discovering existing functionality whereas most FOSS development goes into new idea's or improving already existing products.
Re:Death march (Score:1, Interesting)
IIRC one of the functions of MS R&D was to hire some of the best people in the industy and pay them a ridiculously high salary to "R&D" at MSFT, so that they wouldn't work for a competitor... Could just be the cynic in me though.. :-)
Re:a lot of .NET development has been (Score:3, Interesting)
R&D is not always "innovation". Often it's just making something practical.
Research is the transformation of money to knowledge.
Innovation is the transformation of knowledge to money.
Re:a lot of .NET development has been (Score:3, Interesting)
You may argue that the openMRI took twice as long to develop, but I can assure you that the folks at GE work from 9-5 due to union constraints while MS employees work SA* hours.
BBH
SA hours means that you work 8 hours on your "day off".
Re:Bill Gates? (Score:3, Interesting)
Yeah if they're going to yell about squandered money they should look at some of the bad business decisions in terms of bringing products to market (MSN? XBox? all losing money), rather than R&D.
Comparing Oranges to Apple (Score:2, Interesting)
Re:Bill Gates? (Score:2, Interesting)
Research (Score:3, Interesting)
I'm not normally one to speak up for Bill Gates or Microsoft, both of which I have a long habit of despising (although I think mr Gates appears more sympathetic since he left MS). However, I have always been in favour of doing basic research - without people being willing to "squander" time and resources on finding out about things that give no immediate return on investments, we wouldn't have most of the things we take for granted now: computers, radio, TV, cars, etc etc etc. In fact, most of what we consider human were once a waste of time, people fiddling idly with things they didn't need. Who knows, maybe once somebody was playing with the smouldering remains of a lightning stricken tree and his mates went "Why are you wasting your time on that nonsense, do you think you can eat it? Hur, hur, hur".
Re:Bill Gates? (Score:3, Interesting)