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Microsoft Trumps Google, Yahoo! R&D Budgets 201

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."
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Microsoft Trumps Google, Yahoo! R&D Budgets

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  • by RevDobbs ( 313888 ) * on Friday May 05, 2006 @09:56AM (#15269681) Homepage

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

  • ROI? (Score:5, Insightful)

    by gEvil (beta) ( 945888 ) on Friday May 05, 2006 @09:56AM (#15269682)
    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? (Score:5, Insightful)

      by Herkum01 ( 592704 ) on Friday May 05, 2006 @10:06AM (#15269754)

      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? (Score:5, Funny)

        by tomhudson ( 43916 ) <barbara.hudson@[ ... m ['bar' in gap]> on Friday May 05, 2006 @10:27AM (#15269878) Journal

        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?

        • 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 Microsoft plan on doubling their revenue?"

      • Re:ROI? (Score:2, Insightful)

        by hlh_nospam ( 178327 )
        This is just another organization that believes that if they throw enough money at a problem it will fix anything.

        Well maybe, just maybe, I can finally get a job at MS...

        Ok, just kidding. I would not fit in there anyway. I have way too much experience. The interview would be kinda like the one I had with Amazon -- when I saw that the interview team was composed entirely of children, I knew I did not have a chance.

      • That's the question I'm asking, because before this article I would have guessed microsoft was cutting back on MSN spending. Microsoft will be stopping all CDROM games on their "MSN gaming zone", which will mean a significant loss in traffic.

        Wouldn't it seem more prudent to keep successful programs running while they find new programs to replace them?
      • You cannot produce a baby in one month by impregnating nine women.
    • Re:ROI? (Score:5, Insightful)

      by jo42 ( 227475 ) on Friday May 05, 2006 @10:22AM (#15269847) Homepage
      Bigger Budget != Better Product
      • 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've acknowledged there's a problem and would like someone to think that you're committed to making it less of a problem.

        Which, hey, could be the plan.
    • Re:ROI? (Score:5, Insightful)

      by mschaef ( 31494 ) on Friday May 05, 2006 @10:54AM (#15270070) Homepage
      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...
    • The other point that has been proven again and again is that money doesn't buy talented developers or good ideas. Look how many competitors are throwing money and people into making a real Ipod competitor, have any of them had any real success?
      All I see coming from this is MS bringing on more people and throwing more money at marketing and FUD, none of which has no guarantee of producing any 'Innovation'.
    • How much money has Microsoft spent on MSN so far? How successful has MSN been? How much less successful would MSN be if it weren't leveraged on the Windows desktop monopoly by being the default home page on a new Windows IE installation?

      It's really sad to see a formerly great company reduced to threatening to spend money as a competitive weapon. What ever happened to Microsoft's self-declared innovation superiority?

    • If you want to spur innovation you need to offer the million dollar prizes Google offers to its employees who come up with winning ideas. People will go all out to innovate if there is a million dollars of FU money at the end of the rainbow.

      If you just hire a small army of people working for five or low six figure salaries there is almost no assurance you will get anything innovative out of them at all. No one has an incentive to come up with something amazing and just turn it over to Gates and Balmer, to
    • I remember Apple was out-spending Microsoft in R&D for much of the 90's, and regularly dwarfed Microsoft in patents during the period. If you look at the relative stock prices for the companies in the 90's, you'll see the "we spent more on R&D" or even "we invented more patentable ideas" is no great measure of corporate or product success.
    • The question here is... whose investment is it really? Microsofts? No. Not when they're a monopoly; not when they've been convicted in court of hurting society, and continue to flout that ruling. Microsoft is the kind of company that refuses to lower prices for basic software from a MONTH's wages in developing countries, and then gives a little back to that country when the politicians and other people who can further Microsoft's monopoly are looking.

      They've got a lot of money, sure, but it's OUR money,
  • Input/Output (Score:2, Insightful)

    by Kangburra ( 911213 )
    I guess they're hoping Vista does well then.
  • by pimpimpim ( 811140 ) on Friday May 05, 2006 @09:59AM (#15269697)
    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.

  • by Colin Smith ( 2679 ) on Friday May 05, 2006 @10:00AM (#15269702)
    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.

  • by Tibor the Hun ( 143056 ) on Friday May 05, 2006 @10:00AM (#15269707)
    I can already see it now... multiple widescreen LCDs, macbooks and most ergonomical pens ever designed for everyone...
  • 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.

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

      I agree with your irony.

      "Innovation has nothing to do with how many R&D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It's not about money. It's about the people you have, how you're led, and how much you get it." - Steve Jobs
  • Sadly.... (Score:2, Insightful)

    by Anonymous Coward
    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 (Score:4, Insightful)

    by to_kallon ( 778547 ) on Friday May 05, 2006 @10:01AM (#15269712)
    if-we-throw-enough-money-at-a-problem-it-will-go-a way department.
  • Rough Translation (Score:2, Insightful)

    by kkovach ( 267551 )
    We're not smart enough to innovate efficiently, so we're gonna spend gobs and gobs of money buying it! :-)
  • by GGardner ( 97375 ) on Friday May 05, 2006 @10:03AM (#15269728)
    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'.
    • It would be better if software companies would break out Research from Development.

      That's probably where this [] comes in.

  • Meaningless (Score:3, Insightful)

    by hanshotfirst ( 851936 ) on Friday May 05, 2006 @10:03AM (#15269730)
    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 (Score:3, Insightful)

      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 like Microsoft (or Apple, or Sun, or HP, or Google ...) does all the hard work and successfully brings the idea to the marketplace. The world is full of blue-sky types who sit around and pontificate, and then sit back and wait for someone else to do all th
  • by jarek ( 2469 ) on Friday May 05, 2006 @10:03AM (#15269732)
    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.
    • by pubjames ( 468013 ) on Friday May 05, 2006 @10:32AM (#15269906)
      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.
      • Nah. Good ideas are easy to get, and easy to implement.

        But few people get world-changing ideas. To think up something like Google or Bittorrent is the challenge; doing it is just a lot of fun & hard-work. Granted it sometimes pays off, it sometimes doesnt. However, without the idea carrying weight, all you get is a polished turd. That's how I see it anyway.
  • 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 ?
  • by Anonymous Coward
    Dear Microsoft Executives and Stockholders,

    You cannot buy "innovation".


  • by Savage-Rabbit ( 308260 ) on Friday May 05, 2006 @10:06AM (#15269749)
    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.
  • by gstoddart ( 321705 ) on Friday May 05, 2006 @10:10AM (#15269779) Homepage
    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.
    • Your title is an (intentional?) reference to a certain book [] not all Slashdotters may be familiar with. Sad that it wasn't written 40 years ago, is widely read, and often quoted — but nobody seems to have learned its lessons.
    • It's a cross between PR and camouflage. Oh, there will be checks cut and money spent, but, Microsoft's number one tool is deny the sales channel. Look at it this way, ten years ago Microsoft was out-spending Google and where did it get them? Look at the browser wars: IE was intensively engineered so that "we won because it's a better product," could be used to explain a victory made from bundling. For all the money Microsoft has been (loudly) spending it's Apple that keeps shipping upgrades.

  • Microsoft seems to spend most of its time buying other companies these days. Is this classified as R&D?
  • Typical... (Score:2, Insightful)

    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 software company?
  • "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 contextual work in different ways."

    Instead of coming up with the next search engine, create something entirely new to computing. You have the money, power and capability to do anything you want, let's see some real computing innovation. Start with new softw
    • 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 keep trying for this, hence Media Center. But it seems most people don't really WANT all their gadgets incorporated. Jack of all trades and master of none, and all that. Better to have one device to record TV, another to browse the net, another to play mus

    • New Cool & Useful Technology/Hardware

      Is origami out and do people want to use it other than technical curiosity?

      Oh, wait. It's a tablet PC, just smaller. I get it. Does it run Linux?
  • by blenderking ( 324269 ) on Friday May 05, 2006 @10:14AM (#15269795) Homepage
    I like the approach 37 Signals [] 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! []

    • 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, there's the slavish devotion to the Windows platform - everything at Microsoft must ultimately drive revenue on the Windows platform. That's due to their fundamental formulation of attracting developers by building tools around the Windows platform, rather
  • Outspend? (Score:5, Insightful)

    by 19061969 ( 939279 ) on Friday May 05, 2006 @10:15AM (#15269806)

    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?

  • 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 culture, but given Yahoo's affiliations, I can't imagine being too wrong about it.

    Yahoo! is officially "old news" as far as I'm concerned. I can't imagine what could make them new again. Google, at least for now, has more 'youth' on its side and whatever
  • size! (Score:2, Funny)

    by lovebyte ( 81275 ) *
    It's not the size that counts, it's what you do with it.
  • 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? (or google for that matter).

    Carrying the metaphor to another extreme, I wonder if a heirarchical organization could spring up inside Google - the way modern Christianity overpowered the more decentralized Gnostic-style versions?
  • 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.
  • 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.
  • 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 libre software IP
    • submarine patents to kill libre software initiatives
    • legal harrasment and intimidation of libre software developers
    • lobbyist activities in political parties and governments
    • poisoning the well for libre software in China
    • support of centeral
  • 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 nice to read again in the light of what Microsoft has become...

    Remember when IBM stumbled badly and it took everyone by surprise? I wonder when the crash of Microsoft will be heard. My guess is we've still got about five years to go...
  • But hasn't Google already pretty much hired up all the experts on search algorithms and data analysis in the world? Well, probably not _all_ of them, but the smartest, and MS is getting second pickings at best (though Yahoo probably knows this space better than MS). I haven't heard of any developer defections from Google to Microsoft -- rather, it's been the other way around.

    So what if Microsoft has tons of cash? Money doesn't magically transform into innovation -- it takes brilliant people to do that. Micr
  • but if they are going to spend the money they stole through their OS monopoly, I would by far prefer them to spend it on research than on price-dumping a game console. No I don't pay the microsoft tax, but really I do anyway, because my kids school pays it, my local government pays it, and my employer pays it.
  • by GmAz ( 916505 )
    Microsoft spends 1 billion on R&D for MSN alone while Google spends way way less than that for all its services.

    Google comes out on top because they have a good product and reputation everyone wants.

    Who really won here, the guy who had money to burn for nothing or the guy providing valuable resources and tools.

    Its just common sense to me.

  • by Eponymous Coward ( 6097 ) on Friday May 05, 2006 @11:01AM (#15270123)
    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?

    • It's true they do surface from time-to-time (like Anders Hejlberg)

      Anders came from Borland, not Microsoft R&D. []

    • It's part of their plann.... They realized that they couldn't beat all these programmers working for free on Open Source and Free projects, so they decided to hire them all so they won't contribute to Linux or Apache or Firefox or Samba or....
    • SIGGRAPH for example (Score:3, Interesting)

      by peter303 ( 12292 )
      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.
  • Microsoft has spent billions adversiting all the cool new features that Vista would have, and after soo many years, it is nothing more than XP with new eye candy. This shows that, just because you spend millions/billions, you won't be able to deliver all that you promise.
  • Now, why would MS try to outspend Yahoo when MS and Yahoo are merging [] and MS is already dead []?!
  • All the R&D spending in the world won't make you first at something that someone else is already first at. They should either completely spin off R&D so that the mother company doesn't interfere (so that development can go into uncharted waters), or sink that cash back into legal battles and just sue everyone for everything.
  • Dont cut back on my Pro Club membership, keep that free stuff coming, baby! More valets, damn it! Who wants to stand outside in the rain for more than 30 seconds to get across the campus? They should be LINED UP WAITING FOR ME! My dry cleaning was late last week, forcing me to hang around until 5:03pm! This cant happen! If I dont use my air-miles, you should BUY THEM FROM ME! My corporate AMEX is starting to fade from excessive usage, so you'll be taking care of that, wont you babe? Platinum anyone? I'm get
  • by Churla ( 936633 ) on Friday May 05, 2006 @11:32AM (#15270386)
    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.
  • It's yet another sign that I'm right when I say that MS is run by the Marketing group. It's someone like that who would think that announcing a $1B marketing^w research budget would suddenly (and magically) increase the output from the development group.

    It might do some good in marketing, where you can just go out an buy more time slots with the money, but R&D requires that you have people with ideas to develop and the skill to capitalize on the ideas. Many of those have walked away from MS long tim

  • Sheesh.

    If money was the sovereign cure for lackluster product, MS would have produced the world's most amazing software instead of the steaming pile of code that is MS Office, Windows, etc.
  • by Tom ( 822 )
    So much money - for what? Where are the "innovations" they claim? What is Microsoft Research doing all day?

    Their homepage [] is slow and not very expressive. There's a lot of blabla that reads like your average university summary, and then there's these huuuugly innovative ideas, like in the hardware section:

    We're working on devices which will allow you to use novel forms of input, such as a gesture, a wink, a voice command, or a pen.
    Did someone forgot to update the page after, say, 1980 or so?

    We're also explo
  • "We'll buy 100x as much innovation as google"
    Does anybody else cringe when they hear intangibles commodotized like this? You can innovate for free. (and some people are) Or you can do like google and poach the VCs.
  • Does Google even need to spend half of what MS is planning for innovation? Given 20% time that Google employees get and the product results from that, I'll bet that Microsoft needs to spend all that extra cash to stay where they are in comparison, let alone try to catch up.

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