Gates Puts Faith In "Microsoft Innovation" - Isn't That That an Oxymoron?

From way over in Indonesia, Microsoft (MSFT) Chairman Bill Gates let it be known that Microsoft never needed to buy Yahoo (YHOO) to make headway in search and advertising. It just kind of wanted to.

"We have always felt we could do very well on our own and now that's the path we are focused on," Gates told AP in Jakarta on Friday. "The standard strategy for us is to just hire great engineers and surprise people at how well we can compete, even with a company that's got a strong lead."

Actually, that may be the first bit of sense out of Microsoft since the Yahoo thing first emerged. That is exactly what Microsoft is good at: identifying market leaders in interesting new tech markets, then systematically destroying them. In fact, Microsoft is probably better at it than maybe any company in history. Netscape, Lotus, WordPerfect, Novell, Real Networks...there's a long list of companies that invented something that Microsoft then copied and took down. And Windows, of course, was a copy of what Apple (AAPL) and Xerox (XRX) were doing. Now Microsoft's Zune is taking aim at the iPod.

Microsoft is at its best when it does this. It spends billions of dollars a year on Microsoft Research, but has yet to invent an entirely new business. (Microsoft did once get out in front of a tech development, creating travel site Expedia early on. So surprised was Microsoft that it did this, the company soon thereafter spun out Expedia -- perhaps so Expedia would not contaminate the Microsoft culture with actual market innovation.)

The thing is, though -- search so far is looking like Microsoft's Waterloo. Yeah, it's won every big battle so far, but Microsoft has spent vast amounts of time and money trying to crack search -- and so far has failed. Can it beat Google (GOOG) at Google's own game? That seems unlikely. Can it outwit Google and create an innovative new version of search that Google never thought of? That would be very un-Microsoftian.

So...now what?

Comments

[deaverb]

Kevin's article has all the confidence of attacking Microsoft crisply after the clear Vista disaster, New Coke in different clothes, that Microsoft refuses to dump. Monday would be a good day for it, if not today, Sunday. The emperor with no clothes.

When Microsoft destroyed folks, Kevin's clear and accurate term, "they" had waffled--Apple/Xerox, the classic; Netscape; Word Perfect, way too complex; Lotus, way too complex.

Now the players have emphasized the simple, crisp, and agile--where Microsoft used to win. Google is just...plain magnificent. Google docs is our latest discovery; enterprise list with no fuss. Gmail; search; and on and on and on. iPhone has made the PC the non-center of our corporate life--Safari, didn't even know what it "was" for about a month. Why? It worked so well.

Our retailers want openoffice.org in a non-geeky way; we couldn't make old office work on our Vista test machine (we hate Vista; our customers hate Vista, but we gotta figure it out--as it bobs and weaves through its chaos), so downloaded openoffice.org--and that was the end of that problem.

Working on the old 98 yesterday and was stunned by its elegance (OK, not MAC folks, but so much better than Vista, better than XP, and somewhat better than 2000--as they all get worse).

Microsoft is the new Sears. Big; irrelevant.

Kevin, why haven't they invented anything? What is that??

Great article.

[John Egan]

I agree wholeheartedly. MSFT incorporates other peoples ideas and markets them. MSFT is a just a big business.The real innovators have been left by the wayside. MSFT and innovation shouldn't be used in the same sentence.

Thx jegan ;-)

[bill d]

Gates wouldn't know how to mechanize a NEW idea if it bit him in the ass. If it wasn't for Gary Kildall and Digital Research, Sun & Xerox, there would be no Windows or Microsoft..

[steveballmer]

I have just announced the ZunePhone Halographic! Is that innovative enough for you?

[Tom B]

Many investors continue to live in the past-- a DEADLY practice.

MSFT succeeded in the past 1) because it was easier to break the law (Pre-MSFT vs the US, vs the EU etc. antitrust cases) 2) they had a geeky, but semi-intelligent guy at the helm (Gates).

They have FAILED to prepare for for the future. Vista is STILL not UNIX-based, like LINUX or OSX; thus Vista will never be stable, high-performance, or secure. Windows has third-rate development tools. MSFT has no way forward OUTSIDE of OS's-- XBox, Zune, and Win mobile will NEVER be strong enough to carry this dinosaur company as Vista's market share erodes.

MSFT is like Apple after AAPL ousted Jobs in the 1980's and brought in Pepsi-man Sculley. But, of course, Apple weathered that (with considerable pain) by virtue of the fact the products were so advanced vs the competition-- an advantage MSFT clearly CAN NOT claim today.

[WayneS]

I have Vista, but plan to upgrade to GEM-DOS.
My Atari ST was better with CAD-3D