On reinvesting profits

Posted on June 18, 2009 by pat

Microsoft gets a lot of grief for many of the things that it does, but we should at least give Microsoft credit for being willing to reinvest profits into research and development.

Microsoft CEO Steve Ballmer said he is willing to invest up to $11 billion in search over the next five years. I have a much better idea for Ballmer. Instead of investing in the future, why doesn’t Microsoft consider buying yesterday’s companies — with yesterday’s business models — instead?

That model has been a rousing success for the newspaper industry. The supposed high-minded, civic-minded Fourth Estate has been mostly about profits the last few decades (with some exceptions), while supposed money-grubbing companies like Microsoft take nothing for granted.

Imagine that, a company with robust profits using those profits to invest in the future? Get out. Unheard of.

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  • Chris

    It may sound presumptuous, but in many ways Microsoft and the old media industry are two sides of the same kind of die used in playing “Dungeons & Dragons”. How’s that for a new spin on a cliche?!

    Microsoft is the newspaper industry of the tech sector.

    R&D is a rear-guard effort for Microsoft.

    If you want to wade into the tech subculture — and believe me, you don’t — you’d see that Microsoft is to the computing world what George W. Bush has been to his opponents. It became a point of emotional and intellectual fixation as well as a powerful counter-reaction.

    Without 8 years of George W. Bush, Barack Obama would have never become president. Without Microsoft, there would never be the Open Source Movement. And without the Open Source Movement, there would have never been freetards.

    The terms Open Source and freetard don’t have much of a meaning in the mainstream, but those who know, they are very important terms. These are important terms for Microsoft as well.

    Microsoft’s strength is its size. It’s weakness is also its size. Computing has gotten to a point where there is enough parallel software and a garden of knowledge to completely get around Microsoft if one were so inclined.

    Most people don’t know what Linux is. People who have to work intensively with OSs know, though. Most people don’t know what OpenOffice is, but once it catches on, people may never buy Microsoft Office again. And so on …

    The point is, it doesn’t take large numbers to have a large impact on a big company. If Microsoft thinks big, it would be like if it was trying to kill bacteria with a fly swatter.

    Rear-guard actions may be the wrong tool for the problem.

    The same analogy could be said for the newspaper industry. Maybe technology is not the real problem. Maybe newspapers have gotten so big that they are in the positions now where they are trying to fly-swatter bacteria. In other words, the market has become so diffuse that it can no longer be observed under a microscope. And once you observe things under a microscope, you no longer see the big picture.

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