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Why Microsoft Struggles with Innovation

August 28, 2009

As powerful a company as Microsoft is, and don’t get me wrong they do many things well, they have struggled mightily when it comes to being innovative.  From trying to get into the console market with X-Box, which cost the company billions of dollars when there were already trusted leaders Nintendo and Sony leading the way.  To developing Hyper-V when they probably should have just bought the already widely accepted VMware rather than trying to re-invent the wheel.  Here are the top 6 reasons why Microsoft struggles with Innovation.

No. 1: Me-too thinking. The company spends billions annually on R&D and while it does have a whole bunch of interesting technologies in its labs, it focuses heavily on bringing me-too wares to market. It then tries to peel away customers who are basically happy with the original. Here is a list: MP3 players, video game consoles, Webcams, mobile platforms/devices, cloud-based Office applications, multimedia Web development, and Internet search and advertising. Arguably, Hyper-V can also be added to this list although Hyper-V is a good hypervisor at a great price that has a shot of overturning VMware’s market-leading position.

What should Microsoft be doing instead the me-too game? Solving problems that others cannot. For instance, no other company knows more about developing operating systems than Microsoft. How about using that knowledge to help the world get off the hack/patch/fix/test/hack/patch cycle with say an entirely new operating system concept? We’ve heard snippets of such an operating system, called Singularity (formerly code-named Midori). It’s reportedly been in development since 2003. ‘Nuf said.

No. 2: Microsoft’s customers don’t like change: Microsoft is hamstrung by its own success. So says Microsoft Subnet’s newest blogger, Michael Surkan. Surkan discussed with me the Windows Filtering Platform in Vista, and the complete overhaul of the network stack. He spent months reaching out to third parties that could be affected by the change, such as firewall makers. But with as many ISVs as Microsoft has, changes always tends to break something, somewhere, and Microsoft gets blamed, even if it did all it could to prevent such situations. Microsoft learned its lessons with the Windows 7 process of releasing many beta versions. But Windows 7 is basically an improved version of Vista. Application incompatibility will be kept to a minimum, but so, too, is innovation. Enterprises shoulder some responsibility. They stay with Microsoft because they know the technology. Change too many things and Microsoft opens the door for competitors. The enterprise that pays high prices and signs long-term contracts does so with the demand that Microsoft keep changes to a minimal. (Some enterprises are still clinging to Internet Explorer 6, for goodness sake.) Microsoft is trapped by a circumstance where innovation is at odds with stability.

For the rest of the top 6, go to  I have to say that I for one would love to see what Microsoft could do in the way of an entirely new Operating System.  Something that is started from scratch not built on top of what they have already done.

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