Technology, Culture & Innovation: What’s Gone Wrong with Microsoft?

A fascinating article here from John Naughton in the Observer which asks whether Microsoft has lost the key competitive edge that made it so successful for so long - innovation.

Microsoft has been a giant, almost dominant player in the electronics and software industry for as long as most of us can remember (certainly the Under 40s). But Naughton points to a terrific statistic which students might be able to use to illustrate how quickly market-leading positions can be overcome:

“Apple’s iPhone now brings in more revenue than all of Microsoft’s products”.

When we say all of Microsoft’s products, just think for a minute what that means; all sales of Windows, Office, Xbox etc”.

Naughton goes on to provide the data comparison;

In the quarter ended 31 March 2012, the iPhone had sales of $22.7bn. In the same period, Microsoft earned $17.4bn from everything it sold. So a single Apple product, which didn’t exist five years ago, had higher sales than everything Microsoft has to offer.

Some great analytical points are developed in the article and there are a wide range of relevant points which students who want to research the impact of technological change on markets might note down. Above all, it is the combined speed and scale of change which is so stunning.

I like the focus of the article too on the difficulty that larger, more bureaucratic firms face when they need to remain innovative. Some great points here on the role of culture in either stiffling or encouraging innovation and

I like this quote summarising the feedback of a recent survey of many ex-Microsoft employees;

“They told a dismal tale of opportunities missed, innovations squashed and talented people demotivated by the corporate ethos of a maturing organisation”

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