Microsoft Trumps Google, Yahoo! R&D Budgets

Rob writes to mention a Computer Business Review Online article on Microsoft's commitment to out-spend Google and Yahoo! on innovation in the coming year. From the article: "Microsoft Corp will spend over $1bn on R&D just in its MSN unit, for the fiscal year starting in July, chief executive Steve Ballmer told an audience of would-be advertising customers. The money, part of the surprise spending package that recently gave Microsoft's share price its biggest single-day drop in five years, comes as the company struggles to catch up to Yahoo! Inc and Google Inc in the search and online advertising market."

What about that other big $$$ project?

Nowadays everybody wanna talk [cbronline.com] like they got something to say
But nothin comes out [nickdenton.org] when they move they lips
Just a buncha gibberish [google.com]
And muthafuckas act like they forgot about Vista [google.com]

ROI?

It's nice to know that MS will outspend Yahoo! and Google. However, isn't ROI a more important factor when it comes to things like this? I'm crystal-balling that MS will have the lowest ROI of the three over the next few years.

Re:ROI?

If you also notice, they are going to double spending from $500~ million on MSN to $1 Billion. I don't know many companies that believe they improve their performance just by doubling their budget. After you take into account just trying to rearrange the organization to accomodate that amount of growth can take several years.

This is just another organization that believes that if they throw enough money at a problem it will fix anything.

If you are a stockholder you are in for a wild ride for the next couple of years. Unlike a real rollcoaster, I would get sick from all the ups and downs!

Re:ROI?

Poster wrote:

This is just another organization that believes that if they throw enough money at a problem it will fix anything.

Balmer believes if he throws enough chairs at a problem it will fix anything.

Microsoft Corp will spend over $1bn on R&D just in its MSN unit

That's a lot of chairs ... anyone buying stock in office furniture supply companies?

Google's press release in response...

Googles press release in response...

"We are glad that Microsoft has made this commitment."
We at Google plan on spending less than 10% of what Microsoft does in the next year.
We also plan on more than doubling our revenue in the next year."

"Does Micro

Ob. Colbert adaptation

that's one hell of a press release ... could we say this?

Microsoft isn't throwing chairs on the Titanic. Microsoft isn't sinking - they're soaring. They're throwing chairs on the Hindenberg!

(for those who didn't see the video - links here http://than [thankyoust...olbert.org]

Re:ROI?

Bigger Budget != Better Product

Right On, Interguy

Would that I had mod points for this.

Throwing money at a problem rarely actually fixes it. It's easier to increase a budget than to rethink your R&D priorities, come up with changes, and act on them. Spending more money typically just shows that you'

Re:ROI?

This reminds me of an exchange between Thomas Watson of IBM and Seymour Cray of CDC:

"Last week Control data... announced the 6600 system. I understand that in the laboratory developing the system there were only 34 people including the janitor. Of these, 14 are engineers and 4 are programmers.. Contrasting this modest effort with our vast development activities, I fail to understand why we have lost our industry leadership position by letting someone else offer the world's most powerful computer." - Watson

"It seems like Mr. Watson has answered his own question." - Cray

It looks like that might happen again...

Input/Output

I guess they're hoping Vista does well then.

Re:They just don't get it

To-date, Microsoft's search results on Linux are way biased toward switching to them.

This is demonstrably false. To test it, I entered "linux" into search.msn.com and into google.com.

MSN's first page of results: linux.org, linux.com, kernel.org, Wikipedia's Linux article, Gentoo, IBM's Linux portal, Debian, Red Hat.
Google's first page of results: linux.org, Debian, linux.org.uk, kernel.org, Ubuntu, Mandrake, linux.com, Gentoo, Red Hat, Linux Format.

Pretty similar stuff. The fun is in the sponsored links.

MSN's sponsored link at the very top of the search results: Linux webhosting from webhosting.net.
Google's sponsored link at the very top of the search results: www.microsoft.com/getthefacts.

Re:They just don't get it

Pretty similar stuff. The fun is in the sponsored links.

MSN's sponsored link at the very top of the search results: Linux webhosting from webhosting.net. Google's sponsored link at the very top of the search results: www.microsoft.com/getthefacts.

1bn dollar on search-based advertising?

Maybe they should first optimize the search, and then optimize the advertizing. It doesn't work the other way around, as people don't use search engines for the ads that are there.

As long as google's search engine is better, everyone will search there. On the other hand google's search engine is still far from flawless, so msn could do a nice job if they improved on that. When people will have an actual reason to use MSN search, advertizers will have a reason to get their ads there.

Re:1bn dollar on search-based advertising?

As long as google's search engine is better, everyone will search there. On the other hand google's search engine is still far from flawless, so msn could do a nice job if they improved on that. When people will have an actual reason to use MSN search, advertizers will have a reason to get their ads there.

Nonsense. Given the assumption that stupid people are more susceptible to ads, adverisers should pay a premium to advertise on bad search engines.

Outspend... on innovation...

So who're they going to buy to get their innovation from then?

Rushes to set up a company "CS Innovation Ltd". A mere snip at $20 million.

 

Re:Outspend... on innovation...

Don't worry gramps, they'll buy from you. Anyone with a slashdot user number as low as yours has to have seen everything under the sun ever invented as far as computers are involved.

I wish I was at MS...

I can already see it now... multiple widescreen LCDs, macbooks and most ergonomical pens ever designed for everyone...

As we all know

More innnovation is a direct result of spending more money on it.

Or, maybe that's just Microsoft 'innovation'. They certainly often seem to have a curious definition for that word.

Sadly....

Most of this R&D money won't be spent in order to make their products better, but to acquire broad-to-the-point-of-meaninglessness patents in order to prevent the competitors making their products better.

from the

if-we-throw-enough-money-at-a-problem-it-will-go-a way department.

Re:from the

if-we-throw-enough-money-at-a-problem-it-will-go-a way department.

Wake me up when they dedicate 20% of all their employees time to R&D.

Feel free to shoot me when Microsoft innovates something.

Re:from the

Is that the problem or the money that goes away?

Yes.

Rough Translation

We're not smart enough to innovate efficiently, so we're gonna spend gobs and gobs of money buying it! :-)

Big difference between "R" and "D"

It would be better if software companies would break out Research from Development. Software ages so quickly that almost all software companies are continuously development new products. Research, however, is a different story. I'm guessing this 'R & D' for MSN is all 'D'.

Meaningless

Outspending doesn't imply out-innovating. The most innovative solutions or ideas often result in (or are produced out of a need for) LESS spending.

Also, I've never considered it "innovation" when the primary business model is to copy other products' features and add a few pretty icons and obvious additions. I have yet to see a NEW idea come from Microsoft. I see a pattern of copying existing ideas, and integrating them closely with the OS so people ignore the original product since a good-enough version comes "free" with the OS.

Re:Meaningless

I have yet to see a NEW idea come from Microsoft

This sentiment drives me crazy. Frankly it has been my experience that almost nothing is a new idea! It is remarkable how often somebody comes forward to claim credit for some "innovation" after a company

Common misconception

It is not the number of heads you hire that makes the difference, it's the creativity of each individual that counts. Common view by CEO's is that a certain problem requires so and so many people wich have a given set of buzz words on their CV.
If fact, what you need is to identify the creative (and unique) individuals and it does not matter how many people you have hired unless there is process in place in the company that identifies those individuals and gives them the lead.

Re:Common misconception

It is not the number of heads you hire that makes the difference, it's the creativity of each individual that counts.

It's not even that. Ideas are easy for creative people. It's implementing creative ideas that is hard.

It bet there are already lots of good ideas within Microsoft, trapped under the fat arses of the middle management.

Seems Dvorak was right ?

Isnt it ? While being a matter of jokes all around the world for delaying vista and the problems theyre having with it, they still pour lots of money for msn. who uses msn anyway ?

Dear Microsoft stockholders,

Dear Microsoft Executives and Stockholders,

You cannot buy "innovation".

Love,

Reality

Yes, the cat got my tongue...

Microsoft Corp will spend over $1bn on R&D just in its MSN unit, for the fiscal year starting in July...

That is an impressive figure to be sure but I still think it isn't enough to acheve world domination, why MS can't even develop a sealth fighter for that price let alone a whole fleet of Borg cubes fully armed, warp capable and sporting a giant Windows logo on each side.

Mythical man money?

Is this a case of Microsoft assuming they can throw vast amounts of money at any problem and solve it better than other people?

I mean, nine women can't have a baby in one month. Maybe, just maybe, the reason why Google is out innovating them is they either have smarter people, better development practices, or don't have a bunch of historical baggage of other products they need to slavishly support.

I guess from Microsoft's perspective, it's good to spend money on R&D. Hopefully they'll make better products, and at a minimum they'll probably get to write it off on their taxes.

In the long run though, I wonder if Google won't simply out-do them with fresh thinking, new ways of doing things, and a completely different business model than Microsoft. This may not simply be a matter of keep throwing vast amounts of money at the problem until it becomes easier.
    This may require some more fundamental changes.

R&D? Is that 'buying other companies'?

Microsoft seems to spend most of its time buying other companies these days. Is this classified as R&D?

Typical...

Microsoft throws money at its problems. Like most things in modern America more money usually means more success, right? Bully: I am going to beat you up. Geek: why? Bully: I am bigger than you and I can, that's why! Developers! Isn't Microsoft a softwar

Harness the Power

"One is again harnessing the power of audience intelligence to get better ROI for advertisers," he said, "the second is to really do a better job to give you more complete control over the two separate marketplaces, because, as you know, search and context

Re:Harness the Power

New, Lighter, Less Expensive Secure Operating System

Already done by some bastard from Finland, I'm told.

New Cool & Useful Technology/Hardware to digitize your home, incorporate all your digital gadgets, gaming, GPS, Remote access, etc.

Microsoft

Money as a constraint

I like the approach 37 Signals [37signals.com] takes in discussing constraints. Microsoft has all the money in the world, so to speak and perhaps that's a hindrence to them actually. There was an article a month or so back about that fact that Apple spent so little on R&D relative to revenues and some critics thought this was a big problem (like what's next after the Ipod?) R&D spending as a % is meaningless - it's how it's spent - the objectives, the creativity, the entrpeneriual spirit that matters. Google's mandate to spend 20% on your own projects is a great example of the right kind of spirit and probably costs the company little. Theoretically, Microsoft should be cleaning up in any market they enter just be throwing enough money at the situation. And that, is the core of the problem - thinking that way doesn't put a contraint on making the most of human capital. They have unlimited money and unlimited time - they're not being forced into making the best decisions (except of course, when they feel real competition - that seems to be their only real motivator...)

Happy Cinco de Mayo! [blenderking.com]

Re:Money as a constraint

You're on to something, but I don't think it's just the money. While a big influx of capital and corresponding big expansion is almost always hard to pull off, Microsoft has several other factors that squelch a really exploratory culture. First of all, t

Outspend?

They'll do even better when they start out-thinking their competitors.

They've been outspending Apache for years in the webserver market. What are their respective market shares again?

Outspending guarantees nothing

Google does some pretty fun and interesting things with their company culture. I can't imagine Yahoo! instituting anything similar without a huge change in management. I could be totally wrong on this since I haven't heard anything about Yahoo's company

size!

It's not the size that counts, it's what you do with it.

Can't Resist...

oh, oh its like 1989 all over again, the competetive spending, the silly technology built merely to demonstrate intellectual muscle , the ideologies in struggle... can't resist...

"Mr Gates, tear down that firewall"!

I wonder if there will be a coup attempt

Microsoft spends a lot of money.

In other news: grass is found to be green, water retains qualities of wetness, sky exhibits blue qualities, and your grandmother's rhubarb recipe is not as good as you remember it.

R&D won't pull Ballmer's head out of his ass

Once, ``I'd say developers, developers, developers, developers, but not any more, baby; it's advertisers, advertisers, advertisers,'' Ballmer said at an Avenue A client meeting in March in Florida, while running around the stage and punching the air.

What *does* an R&D budget contain?

The cynic in me is saying:
" Oh, and I suppose that legal costs are covered within an R&D budget also? How much of this is actually going to be used for development, as opposed to turf defending legal action by measures such as:

• legal challenges to l

Microsoft becomes (the old) IBM

I remember reading an interview with Bill Gates many years ago when he said he never wanted Microsoft to become IBM, by which he meant he never wanted to become a big slow moving company full of suits. Any body remember the article in question? Would be ni

Microsoft R&D == Roach Motel

I've heard MS Research described as a roach motel. They employ *lots* of extremely talented people. But it seems that once they check in, they never check out. You see them at conferences and the odd paper trickles out, but they definitely tend to drop off the radar.

I've always wondered what happens to these formerly incredibly productive people. Are they stuck in bureaucratic hell? Are they working on stuff so far into the theoretical that products are years off? Or is it the ultimate cushy job and they just get fat drinking free snapple behind their closed door?

It's true they do surface from time-to-time (like Anders Hejlberg) so you know they are working on something, but this happens so rarely you have to wonder what the hell is going on in there. Why do they get such a lousy return from their huge R&D budget?

-ec

SIGGRAPH for example

There are many MSFT papers at SIGGRAPH, the worlds leading graphics conference. Its hard to get a paper accepted there with up to an 80% rejection rate. Yet I've seen few of these results in commercial MSFT products such as DirectX, XBox, etc.

Re:Lousy Return? Yes.

I can't argue that Microsoft is very wealthy. I just don't see the innovation (MS has made me hate that word...) that I would hope for after making the kinds of investments they have made in R&D. Their main source of innovation seems to come from their

Aside from the normal prattle...

One thing some of you folks might want to consider is that this might be the rumbling of the "big bear" waking up finally.

MS built an empire on some core products. They have rested on those laurels for a while now. They built pretty houses, donated to charity, even threw the occasional chair. Maybe this is them waking up and saying "well what do we want to do now? Hey! Let's actually get back into the serious software business!"

What they have initially to lay out is more capital then most second world nations. You can claim all you want that MS can't buy innovation with money, that they have to find people that "love" their work and all those are at Google or whatever. But I would hold that with deep enough pockets they can start going around to people with big but hard to quantify ideas and say "here's a bucket of money if you think you can make your idea happen".

They might be gearing up to take the Yahoo/Google approach to software and services development and throw several things at the proverbial wall to see what sticks.

As much as the mantra of /. is that all things MS are big, stupid, hated, and evil I would encourage people not to count out the big bear just yet.